Preamble

The House met at a Quarter before Three of the Clock,Mr. SPEAKER in the Chair.

Oral Answers to Questions — ECONOMIC WARFARE.

STAFF.

Mr. Naylor: asked the Minister of Economic Warfare the qualications and duties of that member of the headquarters staff whose salary is shown in the published list to be £1,800 per annum and considerably higher than what is paid to heads of Departments?

The Minister of Economic Warfare (Mr. Cross): The salary drawn by the officer in question is paid to him in respect of two posts which he has held for some years past, namely, those of British Commissioner on the International River Commission and United Kingdom Delegate on the Advisory and Technical Committee for Communications and Transit of the League of Nations. His salary is unaffected by the fact that he now is also employed in the Ministry of Economic Warfare.

Mr. Naylor: Does the Minister seriously suggest that the services of this gentleman are more valuable to the nation than those

of an Under-Secretary of State and three times as valuable as the services of a Member of Parliament?

Mr. Cross: The hon. Gentleman must appreciate that this is a salary to which this gentleman is entitled anyhow as a civil servant, and we are taking advantage of his experience in order to employ him in this particular section of the Ministry of Economic Warfare.

Mr. Lyons: asked the Minister of Economic Warfare the number and percentage, respectively, of the appointments to his Ministry, other than clerical and messenger staff, that were made through the central registry of the Ministry of Labour; when, and by whom, the other persons were appointed, and upon what governing considerations; what it is now proposed to pay by way of emoluments to those whose salaries have not hitherto been fixed; and what are the reasons for the delay in fixing the remuneration of any of the persons employed in his Department?

Mr. Cross: Apart from civil servants, ex-civil servants and service officers, the list published on 25th October in reply to a question by my hon. Friend the Member for East Aberdeen (Mr. Boothby), contained the names of 103 persons. Of these persons, 78 were earmarked before the war—many of them at a time when the Central Register had not been set up by the Ministry of Labour— and 25 have been appointed since the outbreak of war. The names of 35, representing 34 per cent. were on the Central Register but all appointments have been duly notified to the Ministry of Labour.


In all cases, whether the appointments were made by the Foreign Office before the outbreak of war, or by my Department since, the candidates were carefully selected, after interview, on the governing consideration of their special qualifications for the duties for which they were required. I am circulating in the OFFICIAL REPORT details regarding the salaries to be paid in the cases in which the emoluments had not been fixed up to 25th October. Such delay as has occurred in fixing the salaries of certain members of the staff has been due in the main to the urgency with which the appointments were made in consequence of the very rapid increase of the work of the Ministry.

Mr. Lyons: Is it a fact that no one member of the Minister's staff has, in fact, been appointed through the machinery of the Central Register; secondly, may I ask whether every one of his staff is now on a fixed salary, and, if not, what is the reason for the delay in fixing the salaries for people employed in his Department?

Mr. Cross: If the hon. Gentleman will read my reply he will see that a great many of these officers were appointed through the medium of the Central Register. As to the latter part of his question, I think I can say definitely that there are now no outstanding cases where salaries have not been fixed.

Mr. Lyons: Do I take it that in the particulars that the right hon. Gentleman said he would be good enough to publish in the OFFICIAL REPORT he will show the salaries of all those people who were not fixed in salary up to the present moment?

Mr. Cross: Yes, Sir, I think the hon. Gentleman may take it that that is so.

Mr. Herbert Morrison: Will the Minister circulate in the OFFICIAL REPORT the names and qualifications of the persons who are now employed in the Department, including their previous occupations? I think the right hon. Gentleman will appreciate that the information regarding this Department is just as desirable as is information concerning other Departments.

Mr. Cross: I was not proposing to add the previous occupations, but in view of what the right hon. Gentleman says I will certainly do so.

Mr. Benjamin Smith: Will the hon. Gentleman explain to the House with regard to those ex-civil servants that he mentioned whether they are in fact on pension, and, if so, are they now receiving pension and pay?

Mr. Kirkwood: Is there any truth in the statement in the West of Scotland regarding this Ministry, that the recommendation in the appointment of the staff has been the old school tie?

Mr. Cross: I have not the slightest doubt that a considerable number of old school ties will be found amongst them. At the same time, I would point out that the staff consists largely of gentlemen with considerable qualifications and experience who, with considerable self-sacrifice, have joined up in order to put their experience at the disposal of the nation.

Following is the information about salaries which had not been fixed up to 25th October:



£


N. Baliol-Scott
450 (provisional).


Earl of Drogheda
800


Lord Glenconner
450


L. Sturge
350


M. C. Trench
350


Dudley Ward
900


T. Wilson
550

In the case of H. C. H. Bull, the question of the rate of salary is under consideration, but in the meantime the salary which he received as Secretary of the Colonial Empire Marketing Board is being continued under the terms of his contract with the board.

CONTRABAND.

Mr. G. Strauss: asked the Minister of Economic Warfare how many tons of merchandise have been detained by His Majesty's Government for inquiry as to its contraband character; how much has been released; and how much finally declared to be contraband?

Mr. Cross: The total amount of merchandise seized as contraband up to 4th November, was 420,500 tons, but no final decision has yet been reached in the Prize Courts. The hon. Member will appreciate that it is not possible to provide figures of the amount of merchandise detained for inquiry and released. The number of ships detained varies hourly,


and it is frequently unnecessary to take details of all consignments included in their cargoes.

Mr. Levy: May I ask whether it is true that this contraband still remains in the boats, that the boats are consequently put out of action and not used, and that none of this contraband has yet been released and sold?

Mr. Cross: No, Sir, that would not be true as a general statement.

SPANISH IRON-ORE (PAYMENTS).

Sir Arnold Gridley: asked the Minister of Economic Warfare whether he is aware that the Italians are purchasing Spanish iron-ore for which payment is being made in blocked pesetas; that the Spanish Government are insisting on British purchasers paying in sterling on the dollar sterling exchange basis, despite the fact that very large sums in blocked pesetas are held in Spain by British nationals; and whether he proposes to take any steps in the matter?

Mr. Cross: I am not aware of the precise terms of payment which may have been arranged between the Italian and Spanish Governments for a transaction of this nature. But His Majesty's Government are hoping shortly to open negotiations with the Spanish Government during which all questions relating to trade and payments will be taken into account.

Mr. George Griffiths: Is it not a fact that some hon. Members thought the Spanish Government would be looking very favourably upon the British after what we did in the Spanish war?

Oral Answers to Questions — BRITISH ARMY.

CAMPS, SCOTLAND (FOOD AND CLOTHING).

Mr. Woodburn: asked the Secretary of State for War whether he is aware that young recruits at camps in Scotland are having to send home for additional food and for overcoats, and that hardship is experienced by others without these resources; and whether he will take steps to see that adequate supplies are available of both food and clothing?

The Secretary of State for War (Mr. Hore-Belisha): No such information has come to my notice. If the hon. Member will give me particulars, I will have the matter investigated. I have reason to

believe that this is one of the rumours deliberately circulated in the vain endeavour to shake public confidence.

Mr. Woodburn: I will give the Minister particulars of an actual case.

Mr. Hore-Belisha: I think this matter is so important that I will read a letter which I have received from an hon. Member:
I went to Edinburgh on Thursday night last…When I got there I was told that a dreadful thing was happening and they hoped I would try to do something about it. This is the story. The men were billeted in an unused mill. They were treated like cattle, having nothing but straw on the top of cement flooring and one blanket, and that several of them had been taken to hospital with pneumonia, that the food was inadequate, meat in particular being short, and that the men had to go into the town to buy anything to keep themselves going. This story was told to me by responsible municipal councillors, not Labour. I said that I would immediately go into the matter and I took one of these councillors with me and went down to the works. I found the sentry at the gate and I got him to take me to the officer on duty. I explained who I was and I said I would like to look round. I found that each man had an excellent straw palliasse under which he had got two ground sheets, and he had three very good blankets. The men all told me that they were very satisfied and had no complaints. I then went round the kitchens and interviewed all the cooks. I found that the food was plentiful and good. I also interviewed the butcher who told me that he had never been short of meat, and I inspected the meat he had already received that day which was very good indeed. He said that, of course, occasionally they got a side of beef which might have rather more fat than others, but he said he had no complaints whatever and that everything was going well. The officer told me he was not aware that many of the men were going sick; in fact, he told me that the story I had been told was a complete ' mare's nest.' I am trying to find out how it originated, but I rather fancy it is propaganda.

Mr. Attlee: Is the right hon. Gentleman aware that numerous cases are being brought to the attention of hon. Members of soldiers sleeping on the ground in tents without blankets, and that they have been doing so for weeks without any question of propaganda arising? This is a serious matter.

Mr. Hore-Belisha: I would ask the right hon. Gentleman to pause before making statements of that kind. They are all broadcast in Germany. This question


asked me if I am aware that young recruits in Scotland have suffered these indignities. I said if any hon. Gentleman will furnish me with precise information I will immediately send down an inspector to investigate. On the whole the British Army is treated better than any other army in the world.

Mr. Shinwell: Will the right hon. Gentleman deny that apart from propaganda—it is not our intention to use propaganda—in the last few weeks, indeed since the outbreak of war, many complaints have been brought to the notice of the War Office and that in many cases remedies have been found, and does not that prove that there was some justification for the complaints?

Mr. Hore-Belisha: That is a different thing from saying that recruits have had to send home for additional food and that hardship was experienced by others without these resources. I say to the House that I have had no case brought to my notice where any British soldier has been without sufficient food or who has been badly treated in any way. If by some mischance it should prove to be the case that in some out-of-the-way unit unsatisfactory conditions have prevailed, I only ask my colleagues in this House to give me an opportunity to investigate the matter.

Mr. Woodburn: The Minister stated that this was propaganda. May I ask him whether I did not indicate privately in my note that the reference was to Battle Abbey camp? I can add that the conditions were that recruits were sending home to people in my own constituency for food, and there is no propaganda attached to it. It is a simple statement of fact, and I very much resent the Minister's statement.

Mr. Hore-Belisha: If it is true that the hon. Gentleman is referring to a particular unit—I have not seen any letter from him —he might give me an opportunity of verifying those facts.

Mr. A. Edwards: The Minister has made a statement and I think I have the right to say that he has a letter from me regarding a constituency where exactly those conditions prevail.

EUXTON ORDNANCE FACTORY.

Mr. Rhys Davies: asked the Secretary of State for War whether he is aware of the complaints that soldiers on duty at the pump at the Euxton Royal Ordnance Factory are still under canvas without any heat being supplied and that the conditions under which they have to eat are much below standard; and will he take steps to remove these grievances?

Mr. Hore-Belisha: I am informed that no men on duty at the pump at this factory are under canvas, but that there are 21 soldiers in the factory area who are so accommodated. They are provided with stoves. Huts for these men are being erected as quickly as possible, and will include adequate dining accommodation.

CAMP CONSTRUCTION (COST).

Mr. Stokes: asked the Secretary of State for War whether he is aware that the three wooden-hutted camps at Cove constructed each for the accommodation of 1,000 persons have each cost not less than £400,000 and have involved the employment of from 5,000 to 7,000 men at any one time in their construction, whereas the two camps at Arborfield, of similar capacity, to the same specification, and under nearly similar conditions, have cost only £160,000 and never involved the employment of more than 962 at any one time; and whether he will cause a public inquiry to be made into the costs of construction at Cove?

Mr. Mander: asked the Secretary of State for War the position with regard to the Militia camp near Aldershot, estimated to cost £480,000, which has already cost £800,000 and is not finished; whether this contract is based on the old system of a percentage of the total cost; and when completion is expected?

Mr. Hore-Belisha: I have called for a full report. The contract for the camp at Cove was not placed on a cost and percentage basis, but on the basis of cost plus a fixed fee according to various ranges of expenditure. Completion is expected in December.

Brigadier-General Sir Henry Croft: If my right hon. Friend is contemplating building any further camps, will he get tenders from the local contractors who have the labour available and permit them to compete with the others in order to reduce the abnormal costs?

Mr. Hore-Belisha: I will consider that suggestion.

Mr. Mander: When the right hon. Gentleman gets the report will he be good enough to publish it, or, at any rate, to make a statement?

Mr. Hore-Belisha: I shall be only too ready to answer any question on the subject when I have the facts and the analysis.

Mr. Hicks: When the right hon. Gentleman is getting further information about this, will he take into consideration all the factors associated with the camp? Will he take into consideration the fact that when this camp was being built in August—I know, because I was personally asked to get men—there were no men available and 4,000 had to be sent from London each day at a cost of 5s. 6d. each per day, which accounts for £130,000, independent of anything else?

Mr. Hore-Belisha: In considering this matter I should be most grateful for any assistance and advice which the hon. Gentleman, with his great experience, can give me.

POSTAL DELIVERIES, EXPEDITIONARY FORCE.

Mr. John Morgan: asked the Secretary of State for War whether postal packets addressed to units in the serving Forces overseas are now being delivered without the delay or undelivered returns which occurred earlier?

Mr. Amnion: asked the Secretary of State for War whether he is aware that letters and parcels addressed to serving soldiers upwards of a month ago have not been delivered, and that others despatched on 30th September were not delivered until 19th October; and whether, having regard to the anxiety such delay causes both to the relatives at home and to the men with the Forces, the delivery of correspondence can be accelerated?

Mr. Neil Maclean: asked the Secretary of State for War why many of the soldiers serving with the British Expeditionary Force have not received any letters from home for five weeks although the relatives have sent those letters addressed, as instructed, care of Army Field Post Office, London; if this post office is understaffed; and, if so, whether he will undertake to have this remedied

and so remove a source of grievance with both serving soldiers and their relatives at home, who are constantly receiving letters from the British Expeditionary Force asking why they do not write?

Mr. Hore-Belisha: As I have previously stated, letters and parcels, when correctly addressed, are now proceeding from this country to France with regularity and despatch, and should normally reach their destinations in six days at most. New instructions facilitating the method of address for letters were recently issued, and it is no longer necessary to include the words "c o Army Post Office" in the address of any letters to the British Expeditionary Force. There are, however, still some 4,000 letters a day which, in spite of every effort, cannot be delivered owing to faulty addresses. The Army Post Office staff was increased some three weeks ago, and is now adequate.

Mr. Morgan: Does the Minister mean by "correct address" the actual unit and number of the man concerned?

Mr. Hore-Belisha: indicated assent.

Mr. Ammon: Is the right hon. Gentleman aware that, with an Army that is static, much smaller and less widespread, it takes longer to deliver a letter than at any time during the last War?

Mr. Hore-Belisha: If the hon. Gentleman will look at the map—which I regret he cannot do—to see the location of these units he will understand what a splendid job of work has been done by the postal authorities.

Mr. Ammon: That does not answer the question. I have submitted to him cases of four or five weeks' delay.

Mr. Hore-Belisha: There may be cases of, not only delay, but complete impossibility to deliver letters even in Great Britain, because of inadequacy of address. The Assistant Postmaster-General was good enough to go out to France himself. It is generally admitted that the system is now extremely efficient. If the hon. Member will read some of the reports of the military correspondents, he will see that all difficulties are being cleared up, except that we cannot deliver letters which are not properly addressed.

Mr. J. Morgan: Will the right hon. Gentleman taken an early opportunity of broadcasting on this particular point, because it is so important?

Mr. Hore-Belisha: Yes, Sir. I think it is a most important matter. I am anxious that correspondence should flow as freely and regularly as possible, and I will do everything I can to assist.

Mr. Maclean: Did the right hon. Gentleman not see that in my question I stated that the letters were correctly addressed, as the parents were instructed? Would he be good enough to say where the new instructions can be seen, so that parents will know exactly how to address the letters?

Mr. Hore-Belisha: The instructions were published and broadcast, but I will see that they receive further and wider publicity. The new instructions were given in order to simplify the procedure; but if letters are correctly addressed according to the old procedure, they will reach the troops, provided the persons to whom they are addressed can be identified.

Mr. David Grenfell: Will the right hon. Gentleman given an assurance on one further point? Will he explain why letters have been delivered and parcels addressed to the same destinations have not? It would be reassuring to the senders of parcels.

Mr. Hore-Belisha: When giving that further publicity which has been suggested, I will try to make as comprehensive a statement as possible, for the guidance of those who naturally wish that the correspondence should reach the destination as early as possible.

WEARING APPAREL.

Mr. Mathers: asked the Secretary of State for War why soldiers who have not been issued with Army gloves and greatcoats are being compelled to refrain from the use of their own and punished for wearing them; and whether he will cause commanding officers to allow the use of civilian supplies until Army issues are made available?

Mr. Hore-Belisha: The answer to the first part of the question is that I am not aware of any such cases; and, to the second part, that not only is the use of civilian coats permitted, but a monetary allowance is made for their use.

Mr. Mathers: The right hon. Gentleman asks for details of these cases. Will he accept the details without the name of my informant, provided that he is able to identify where these irregularities—as I consider them to be—take place?

Mr. Hore-Belisha: Only too readily; but they were not identifiable from the question.

Commander Locker-Lampson: asked the Secretary of State for War whether he will ensure that all troops serving at the front in winter are equipped with india-rubber boots, in order that they may be adequately protected against mud and damp?

Mr. Hore-Belisha: An adequate supply of these boots is available.

MOTOR GOODS VEHICLES (REQUISITIONING).

Captain Strickland: asked the Secretary of State for War how many road motor goods vehicles have been impressed and requisitioned, respectively, by his Department; and how many of these were the property of railway companies?

Mr. Hore-Belisha: Up to 28th October last, 17,446 goods vehicles, none of which was the property of a railway company, had been impressed under the provisions of the Army Act. There has been no requisitioning by the War Department of vehicles under the Defence Regulations.

Mr. R. J. Taylor: Is the right hon. Gentleman aware that there is tremendous dissatisfaction about the requisitioning of these private vehicles? In some cases a man has been told to get another lorry and his own lorry has not been taken, so that he then has had two left on his hands, while in other cases lorries which have been taken have been sent back to the owners.

Mr. Hore-Belisha: Obviously, if one requisitions about 18,000 vehicles, inconvenience is caused; but the bulk of the requisitioning has now been done. If the hon. Member has particular instances of the kind he mentions, where injustices have been caused, I will look into them.

CHAPLAINS.

Commander Locker-Lampson: asked the Secretary of State for War why he


has placed an embargo upon the use of clergymen over the age of 40 as chaplains in the Army; and whether he will relax this in the case of clergymen with past experience in the late war, and especially those who have held commissions in the Army?

Mr. Hore-Belisha: The reason why the age limit for war emergency commissions for chaplains was 40 was that almost 50 per cent. of the chaplains who were serving at the outbreak of war, including those who were embodied from the reserves as a result of the war, was over 40 years of age, and it was necessary to secure a number of younger chaplains to preserve the balance in the Department. It has now been found possible to raise the age limit to 50.

DEATH PENALTY.

Mr. Mathers: asked the Secretary of State for War whether, in view of the waste of life involved in the application of the death penalty in previous wars, he will order its abolition in the present war?

Mr. Hore-Belisha: Since the last war, the death penalty has been abolished for a number of offences including desertion, cowardice and sleeping when on sentry duty, and now remains, as a maximum punishment, only for murder, mutiny and offences of a treacherous character.

Mr. Thurtle: Is it not a fact that the abolition of this death penalty was one of the wise and humane things which the last Labour Government did?

DEPENDANTS' AND SPECIAL ALLOWANCES.

Mr. T. Smith: asked the Secretary of State for War the machinery for considering claims for family and dependants' allowances; and whether he will consider revising the membership of the Military Service (Special Allowances) Advisory Committee, in order to provide for a larger proportion of members, including both men and women, with a first-hand knowledge of working-class conditions of living?

Mr. Lawson: asked the Secretary of State for War what steps he is taking to see that Army Order 170, which lays down the conditions for parents' allowances where a son is in the Army, is made better known than at present?

Mr. Hore-Belisha: I would ask the hon. Members to await the publication of the

White Paper, which will cover the machinery for dealing with these questions. I shall be happy to consider the best means of giving the widest publicity to the contents of the Paper.

Mr. T. Smith: When are we likely to have this White Paper, and will it deal with the second part of my question, namely, the suggestion that the advisory committee should include a larger proportion of members with knowledge of working-class conditions?

Mr. Hore-Belisha: I think the White Paper will mention the personnel. As the hon. Gentleman is aware, the personnel includes a former Labour Member of Parliament and others with great knowledge of working-class conditions.

Viscountess Astor: I hope that my right hon. Friend will see that there are some women on the committee?

Mr. Hore-Belisha: This is a Ministry of Pensions committee, but its personnel can always be reconsidered. As the hon. Gentleman knows, certain matters are under consideration in connection with the procedure of the allowances, and I will delay publication of the White Paper until they are settled.

Viscountess Astor: May I have an answer to my question? Is it not very important that there should be a woman on a committee dealing with family allowances?

Mr. Liddall: asked the Secretary of State for War whether a soldier, separated from his wife, is precluded, under the Regulations for Army Allowances, 1938, Section 224 (c), from receiving married allowance, notwithstanding that he has been making her regular payments under a deed of separation; and, if so, will he take steps forthwith to remove the discrimination against such soldier?

Mr. Hore-Belisha: In such a case the separated wife may be eligible for an allowance as a dependant.

Mr. Shinwell: asked the Secretary of State for War whether there is any appeal against the decision of the War Office when application for allowances to dependants is refused?

Mr. Hore-Belisha: If an application for a dependants' allowance is refused, it is because the prescribed conditions are not


fulfilled. If there are special circumstances which might warrant exceptional treatment outside the provisions of the normal regulations, there is access to the Military Service (Special Allowances) Advisory Committee.

Mr. G. Griffiths: What is the rule regarding the amount that a parent may get?

Mr. Hore-Belisha: That has all been published with great particularity in a White Paper.

Mr. Griffiths: Is the Minister aware that in the case of parents who had been receiving 44s. a week from their son, the father being in hospital and receiving sick pay, the mother simply gets 5s. a week from his Department; and can they make an appeal against that?

Mr. Hore-Belisha: I cannot judge the facts of that particular case, but if all the surrounding circumstances are compatible with what the hon. Gentleman has just said, it would seem that she would get the maximum rate of allowance.

Mr. H. Morrison: Is the Minister aware that a number of tenants living on London municipal housing estates with no rates are unable to pay the rent in cases where the husband is on war service owing to the smallness of these dependant allowances; and could they make an appeal in cases of that kind?

Mr. Hore-Belisha: That is exactly what the tribunal is for.

Mr. Shinwell: asked the Secretary of State for War how many applications for dependants' allowances have been received, and how many were rejected since the beginning of the war?

Mr. Hore-Belisha: To 21st October, 39,144 claims had been received, and 10,642 had been rejected.

Mr. Shinwell: Does not the figure of rejected cases justify the claim to some kind of machinery being established?

Mr. Hore-Belisha: I do not see that it follows at all. Many people ask in this world as a matter of course, but it does not follow that the claim is a good one.

Mr. Lawson: Is the right hon. Gentleman aware that during the last war there was a right of appeal to the local pensions

committees, who could investigate, and that people had direct access to them; and is he also aware that the bulk of the people do not know why they are refused dependants' allowances?

Mr. Hore-Belisha: We have, in addition to that procedure, this special allowances tribunal, and they may have access to that also, but I am only too ready to listen to any particular suggestions which the hon. Gentleman may have to make.

Mr. Lawson: Is the right hon. Gentleman sure that the special committee is a tribunal of appeal for parents?

Mr. Hore-Belisha: It is not a tribunal of appeal at all. It is a committee to deal with special cases. The other cases are questions of fact. Either a question is eligible or not; it is a question of fact.

Mr. Shinwell: asked the Secretary of State for War how many applications for financial assistance have been received by the Military Service (Special Allowances) Committee, and how many have been refused a grant?

Mr. Hore-Belisha: Up to 2nd November, inclusive, 3,115 applications had been received, and 1,297 had been rejected.

Mr. Aneurin Bevan: Would not a great many of these difficulties be avoided if each member of the Armed Services were supplied with a small pamphlet setting out all the conditions under which allowances were granted?

Mr. Hore-Belisha: That seems to be a very helpful suggestion. Of course they have been handed the information, but it is surprising how difficult it is to get them to read it sometimes, but I will do everything that I can to get the facts known.

Mr. Bevan: Will the right hon. Gentleman consider that suggestion?

Mr. Hore-Belisha: Yes, Sir; I will.

Mr. Shinwell: In view of the large number of cases rejected by this committee, would the right hon. Gentleman consider the setting up of some kind of appeal machinery?

Mr. Hore-Belisha: It is an appeal to get something in addition to the prescribed allowances.

Mr. Shinwell: Is the Minister correct in saying that the Military Service (Special Allowances) Committee is an appeal tribunal? Was it not specially set up to enable applications to be made for special grants?

Mr. Hore-Belisha: Yes, Sir; it is for a special kind of allowances over and above, and apart from, the ordinary allowances that are laid down. In that sense it gives a further opportunity to the men to make a claim.

Mr. Glenvil Hall: asked the Secretary of State for War whether he will consider the possibility of allowing weekly insurance premiums to be taken into account, in addition to payments made in respect of rent and rates, by applicants for special hardship allowances?

Mr. Hore-Belisha: Account is taken of weekly insurance premiums in the same way as of other factors.

Mr. Lawson: asked the Chancellor of the Exchequer why the allowances to parents are excluded from the investigation now being made into allowances paid to soldiers' dependants?

The Chancellor of the Exchequer (Sir John Simon): Parents of men serving with the Forces come under the scheme of what is known as dependants' allowance, which is distinct from the family allowance for wives and children, and which is governed by quite different considerations. I am not aware that the rates of dependants' allowance have been called in question, but in any case the subject is not strictly related to the review of children's allowances which the Government undertook to conduct.

Mr. Lawson: Is the right hon. Gentleman aware that in the Debate which took place reference was made to this subject, and that there is great dissatisfaction in the country in regard to it? The Government will make a great mistake if they do not consider it.

Sir J. Simon: I think the hon. Member is quite right and that he did make a reference to this matter in the Debate. If he can conveniently indicate the nature of the complaint I have no doubt that it will be looked into.

Mr. Lawson: Am I to take it that if it is looked into the committee will investigate these allowances and conditions?

Sir J. Simon: I think I am right in saying that the committee is not in fact covering this point. If the hon. Member will give me or the Secretary of State for War some information on the matter it will be looked into.

Mr. George Hall: Has the inquiry now proceeding in South Wales anything to do with the matter?

Sir J. Simon: I am told that it has nothing to do with it.

YOUTHS (OVERSEA SERVICE).

Mr. Ammon: asked the Secretary of State for War whether he is aware that, despite his promises, men between the ages of 18 and 19 years are being drafted overseas; and what steps are being taken to see that the promise is implemented?

Mr. Hore-Belisha: Definite instructions have been issued that no officer or man is to be sent overseas under the age of 19. In any case brought to notice where an officer or man has been subsequently found to be below that age, he is returned to this country, unless he is within a fortnight of 19, in which case he is sent to the base until he becomes 19.

Sir William Davison: Will my right hon. Friend say whether this applies to people who voluntarily joined up prior to the people under the National Service enlistment?

Mr. Hore-Belisha: Yes, Sir; 19 is the age.

MARCHING SOLDIERS (ACCIDENT).

Mr. Thorne: asked the Secretary of State for War whether he can give any information in connection with an accident to eight soldiers, who were injured on the night of Tuesday, 31st October, when a motor lorry crashed into a column on march outside London; and whether the men will get their pay and allowances until they are fit to return to their regiment?

Mr. Hore-Belisha: The accident occurred on the evening of 30th October at about 6.45 p.m. to a party of 50 men who were being marched back to their barracks after attending a concert. A sergeant was marching in the rear of the party and had a torch which he had orders to flash about every ten seconds. A small private car ran into the rear of the party injuring ten of them. The


sergeant received rather- severe injuries, namely, concussion and a broken leg, but he is making good progress. The injuries to the others were slight. The men were all seen by the medical officer that evening, and seven of them were able to return to their unit forthwith. There will be no cessation of the pay and allowances of the men.

Mr. Woodburn: Would it be possible to have a lamp attached to the outside man at the rear of each of these marching squads?

Mr. Hore-Belisha: I will consider any such precautions as may be possible.

Mr. Benjamin Smith: Animals have to have them.

HUTS (ROOFING).

Mr. Vernon Bartlett: asked the Secretary of State for War whether, in view of the delay in the supply of coloured asbestos for the roofing of army huts, he will consider the advisability of obtaining tiles which can be delivered immediately and at a much lower cost?

Mr. Hore-Belisha: No delay is anticipated in the supply of coloured asbestos roof material, which I am informed is cheaper than tiles and needs less timber.

HORSES.

Mr. Radford: asked the Secretary of State for War whether all horses and other transport animals which become surplus to military requirements while abroad will be either brought back to the United Kingdom or destroyed under military supervision in accordance with the policy of the Army Council, as announced in 1936?

Mr. Hore-Belisha: The assurance asked for is in accordance with the practice that has for a long time been observed in the disposal of British Army horses on foreign service, and there is no intention of departing from it.

Mr. Radford: While thanking my right hon. Friend for his reply, may I ask whether he realises the wide satisfaction with which the announcement of the Government will be received?

Brigadier-General Sir Ernest Makins: asked the Secretary of State for War whether he will lay on the Table of the House a copy of the instructions issued

to War Office agents buying horses for Army purposes?

Mr. Hore-Belisha: It would be contrary to practice to adopt my hon. and gallant Friend's suggestion, but I would refer him to the statement made by my hon. Friend the Financial Secretary on Tuesday, 24th October.

Lieut.-Colonel Acland-Troyte: Are the owners of these horses the only people who are not to get a fair price?

Mr. Hore-Belisha: If that is so there is an appeal.

Sir E. Makins: Is not the real reason that the orders are so sketchy that they cannot understand them?

Mr. Hore-Belisha: That is not the reason at all. The reason is obvious.

Sir E. Makins: asked the Secretary of State for War what impressment of horses there has been in Scotland and Wales; and whether he is satisfied that this impressment was well spread over the countryside?

Mr. Hore-Belisha: Horses have been impressed in England, Scotland and Wales. Should it be necessary to obtain further horses for the Army, areas not yet visited will be the first to be drawn on.

WARWICKSHIRE YEOMANRY.

Mr. Glenvil Hall: asked the Secretary of State for War whether he is aware of the unsatisfactory conditions under which men of the Warwickshire Yeomanry are living in the camp allotted to them; and whether he will take steps to see that both rations and facilities for sleeping and recreation are immediately brought up to the standard prevailing elsewhere?

Mr. Hore-Belisha: I have called for a report, and have received the following reply from the Command:
Allegations unsatisfactory living conditions Warwickshire Yeomanry have no foundation in fact. No troops are under canvas and all have been quartered in permanent buildings both for sleeping and feeding since September except line guards who have huts. Only tentage in use is that of Navy, Army and Air Force Institutes for which huts are now being provided. Every man in possession palliasse and bolster. Standard of messing is high. Standard of discipline is high. Regimental Sports Board meets regularly and rugby and Association matches take place on half holidays. Free cinemas and concerts have been and will


continue to be provided. No complaints against either living conditions or food have been made to either commanding officer or squadron commanders. Regiment deeply resents allegations contained in your message under reference. I wish to add that much valuable time has now been wasted examining a charge which I am satisfied is entirely baseless.

Mr. Hall: Is the right hon. Gentleman aware that I made no reference whatever to canvas in my question? Is he aware that this information came to me from what I thought was an unimpeachable source?

Mr. Hore-Belisha: I would only say that it does not matter to me personally or TO the hon. Member personally, but every one of these statements is broadcast in Germany.

Mr. Maxton: If I put down a question along similar lines, well authenticated, and not coming from Germany, will the right hon. Gentleman promise to give me an answer without being bad tempered about it?

Mr. Hore-Belisha: Yes, Sir. I should be equally as good tempered in answering a question of the hon. Member for Bridgeton (Mr. Maxton) as I have been in answering this question.

Lieut.-Colonel the Marquess of Titch-field: Is my right hon. Friend aware that I live within five miles of where the Warwickshire Yeomanry are stationed, and that I have seen a great deal of the officers and men, and I can assure him that there is nothing in the allegations put forward?

COMPLAINTS.

Miss Wilkinson: asked the Secretary of State for War whether, in view of the fact that the present Army is a citizen Army by conscription embracing all male Parliamentary voters, he will amend the regulation prohibiting serving soldiers from writing to their Member of Parliament about grievances so as to preserve the right of any citizen to appeal to his Member of Parliament?

Mr. Hore-Belisha: No, Sir. It is not proposed to undermine the responsibility of commanding officers for dealing with complaints themselves or acting as the channels for their conveyance to higher authority, and it will be appreciated that any other system would make the position of those with responsibility impossible of discharge.

Miss Wilkinson: Has the Department drafted this regulation to prevent soldiers from communicating with their Members of Parliament when their wives are not getting allowances?

Mr. Hore-Belisha: Judging from my experience, wives do not hesitate to exercise their ordinary rights as citizens.

Mr. Benjamin Smith: Is it not a fact that many letters that Members of Parliament are receiving from their constituents are prefaced with the statement, "I am advised by my commanding officer to write to my Member of Parliament"? Will the right hon. Gentleman look into that?

Mr. Hore-Belisha: I have never seen such a case in the whole of my experience.

AUXILIARY TERRITORIAL SERVICE (CLERICAL WORK).

Mrs. Adamson: asked the Secretary of State for War whether he is aware that a large amount of clerical and typing work is being done in the outstations of his Department by members of the Auxiliary Territorial Service; whether it is with his authority that women applicants for employment at Ministry of Labour Employment Exchanges are being informed that there is no possibility of their being placed in clerical posts in the Government service unless they are prepared to join the Auxiliary Territorial Service; and whether he will take steps to bring an end to this undue pressure, and also help to solve the present unemployment problem by allowing clerical and typing posts in his Department to be filled by the appointment of suitable civilian applicants registered at the Employment Exchanges?

Mr. Hore-Belisha: The answer to the first part of the question is "Yes, Sir." The Auxiliary Territorial Service has a definite place in our military organisation and has a patriotic appeal which is of the utmost value. My right hon. Friend the Minister of Labour informs me that there is no warranty for the suggestion contained in the second part of the question, and while Ministry of Labour offices doubtless inform all applicants of vacancies, there is no pressure put upon them to join the Auxiliary Territorial Service. Those who do so are uniformly inspired by the same motives of service as


impel men to undertake military duties. The last part of the question does not, therefore, arise except that the Auxiliary Territorial Service is a mobile service and its members can perform work of the utmost value in all areas, including those where civilians are not available. No woman employé of the War Department has been displaced by a member of the Auxiliary Territorial Service, but many men have been released for service.

Mrs. Adamson: Will the right hon. Gentleman take into consideration any facts that we can give him in regard to the pressure that is being brought to bear on these women?

Mr. Hore-Belisha: At the Employment Exchanges? I will certainly take into consideration any facts which the hon. Lady lays before me.

ALLEGED OFFER.

Mr. A. Edwards: asked the Secretary of State for War why the War Office refused a gift of £50,000 for blankets or canteens?

Mr. Hore-Belisha: I cannot trace that the War Office has received this offer.

Mr. Edwards: Is the right hon. Gentleman aware that I sent him this statement published in a reputable paper by a reputable journalist? Are we to understand that it is the Minister's opinion that there is no foundation for this offer?

Mr. Hore-Belisha: The copy that the hon. Member sent me was from a very reputable journalist, Mr. Hannen Swaffer, and the statement says:
I chanced to overhear a conversation which has resulted in a munificent gift to the Polish cause. A woman friend of mine was at a tea party in London and she heard someone in a corner talking.
That is the basis of this question.

Mr. Edwards: Will the Minister answer the last part of the question? Is he satisfied that there is any foundation for this statement?

Mr. Hore-Belisha: Does the hon. Member ask whether I hope it had foundation? If anybody offers £50,000 to the Army I will accept it forthwith.

Oral Answers to Questions — SCOTLAND.

HERRING FISHING, FIRTH OF FORTH.

Mr. Henderson Stewart: asked the Secretary of State for Scotland whether he is now able to announce the conditions under which the winter herring fishing will be permitted to carry on in the Firth of Forth?

The Secretary of State for Scotland (Mr. Colville): This matter is being discussed with the naval authorities, and I am not yet in a position to make any announcement.

Mr. Stewart: Will the right hon. Gentleman remind the First Lord of the Admiralty of his pledge given to the House last week when he said:
I feel absolutely bound to do everything possible to prevent the needs of the Admiralty and the Navy from ill-using or unduly uupsetting this invaluable industry."— [OFFICIAL REPORT, 1st November, 1939; col. 1908, Vol. 352.]
Will my right hon. Friend press on the First Lord of the Admiralty the urgency of coming to a decision?

Mr. Colville: I am sure that my right hon. Friend is fully aware of these considerations. I would point out that the main part of this fishing does not begin until about the new year.

ALLOTMENTS, GLASGOW.

Mr. Leonard: asked the Secretary of State for Scotland what arrangements have been made in Glasgow to meet the request of 300 citizens for allotments?

Mr. Colville: I am informed that the allotments sub-committee of Glasgow Corporation have had this matter under consideration; and that the Corporation have already acquired enough land to provide allotments for more than 600 holders.

EVACUATION.

Mr. Mathers: asked the Secretary of State for Scotland whether he has considered the request of the South Queens-ferry Town Council that, in addition to school children, those of pre-school age, and their mothers, should also be evacuated; and whether he has agreed to this?

Mr. Colville: As the hon. Member knows, difficulties have arisen in connection with the evacuation of mothers with their children and no further


evacuation of this class from the original sending areas is contemplated at present. I have, however, arranged that the Department of Health should discuss with the town council and the receiving authorities the question of how far the pre-school children in South Queensferry could be evacuated either with their mothers or as unaccompanied children.

Mr. Gallacher: Did the right hon. Gentleman receive a letter from me enclosing a telegram from the commanding officer of the area of North Queens-ferry urging that this evacuation should take place?

Mr. Coiville: I did receive the letter from the hon. Member, and I should explain that I did arrange for the authorities in that area also to be consulted on the same question.

LICENSED GROCERS' SHOPS (HOURS OF CLOSING).

Mr. Kennedy: asked the Secretary of State for Scotland whether he has considered the complaint of the Scottish licensed grocers regarding the effect of the Order-in-Council for the early closing of shops for the sale of beer, wines and spirits; and whether he proposes any variation of the reduction of the hours of sale during the Christmas and New Year period from 48, as allowed by the Licensing Act, to 28½ under the new Regulations?

Mr. Coiville: I am unable to trace the representation referred to in the question, but I would point out that the recent Order-in-Council fixing earlier closing hours for shops does not apply to the sale of intoxicating liquor, which is governed by the Licensing Acts.

Oral Answers to Questions — WHISKY (PRICE).

Captain Sir William Brass: asked the Chancellor of the Exchequer whether he is aware that whisky is being retailed at 14s. 3d. a bottle, while in his Budget speech he estimated the cost to the public at 13s. 9d. a bottle; and what is the explanation of this divergence?

Sir J. Simon: The statement which I made in my Budget speech was a calculation of the effect of the duty in increasing the pre-war price. I understand that the divergence referred to is claimed by the trade to be due to other elements.

Sir W. Brass: Is my right hon. Friend satisfied that this increase is a reasonable one?

Sir J. Simon: It is not for me to be satisfied with that. The matter relates to what are alleged to be increased and excessive charges and that is a question in which the Board of Trade have an interest.

Viscountess Astor: Does my right hon. Friend not think that it would be a good thing in war time for the Government to take over the control of this trade?

Oral Answers to Questions — EXCESS PROFITS TAX.

Mr. Liddall: asked the Chancellor of the Exchequer whether he is aware that Excess Profits Tax, as now imposed, will penalise expansion of trade by causing it to secure less dividend on a greater effort than had previously been secured on a smaller effort; and that the results on £8,000,000 of assets employed by the Birmingham Small Arms Company, prove that Excess Profits Tax enforced rigidly, discourages incentive to work harder to produce more, and prevents a concern making reserves for after-war trading; and will he devise a suitable readjustment?

Sir J. Simon: I am unable to accept my hon. Friend's suggestion that the Excess Profits Tax can properly be regarded as penalising trade. As regards the latter part of his question, he will appreciate that it would not be proper for me to discuss the liability to taxation of a particular taxpayer.

Oral Answers to Questions — GOVERNMENT DEPARTMENTS.

STAFFS.

Sir Ralph Glyn: asked the Chancellor of the Exchequer what were the duties and terms of reference of the staffs committee set up in the last war to supervise and report on the staffing of Government Departments; and whether it is intended to follow this precedent which was favour-abry reported on by the Haldane Commission?

Sir J. Simon: I will, with my hon. Friend's permission, circulate in the OFFICIAL REPORT the terms of reference of the committee referred to. Effect was given to the main recommendations of the


committee in the matter of staff control and the resulting changes have become a permanent feature of the organisation of the public service. Establishment branches now exist in all the larger Departments and in consultation with the Establishments Department of the Treasury they keep staffs under constant review, as was also advocated by the Haldane Committee. I would also remind my hon. Friend of my statement in the House on 28th September last, when I mentioned my intention to institute special inquiries in particular Departments where necessary, calling in the help of experienced men of business to act in conjunction with officials of the Treasury and representatives of the Department concerned.

Following are the terms of reference:

The Committee on Staffs was appointed under Treasury Minute of the 13th February, 1917, to inquire into the numbers and organisation of the clerical staffs employed in the new Ministries created and in other Departments in which large additions to the staff engaged had been made since the beginning of the war, the method of recruitment and the rates of remuneration, and to report what measures should in their opinion be taken to secure better co-ordination in respect both to recruitment and organisation, to effect economies in numbers and cost, and to prevent overlapping.

Mr. Lyons: asked the Financial Secretary to the Treasury whether his attention has been called to the delay in fixing the salaries of several persons upon their appointment to positions in new Ministries; whether he can state the reasons for such delay; and whether, in the public interest, an order can be issued that no such appointments should be made without the emoluments being fixed at the time of appointment?

The Financial Secretary to the Treasury (Captain Crookshank): My hon. and learned Friend will appreciate that in the extreme pressure of the early days of the war it was at times necessary to invite persons to accept appointments in new Departments before the precise emoluments attaching thereto had been fixed, although the broad basis of payment had been agreed between the Treasury and the Department concerned. Cases also

arose in which, although the salary of the post had been fixed, it was not, for similar reasons, always possible to communicate it to a person who had agreed in peace time to hold himself available for a post of such character in the event of war. I have no reason to think that any serious difficulties will arise in future in regard to this matter.

Mr. Lyons: Can the Financial Secretary say whether in relation to the appointments which are now taking place they will be at a fixed salary, and whether in the case of those persons who have been appointed not at a fixed salary, fixing will take place forthwith?

Captain Crookshank: As regards the future, as I have said, I have no reason to think that there will be any serious difficulty. I think the fixing has been done.

BILLETING.

Sir John Wardlaw-Milne: asked the Financial Secretary to the Treasury whether he is aware that, under the Civil Defence Act, notice is being given to householders that they must have rooms ready for the accommodation of civil servants without any consideration for the future personal or family arrangements of the householder, and without any guarantee that the accommodation will in fact be occupied or, in the event of non-occupation, that compensation will be paid; and what action he is taking in the matter?

Captain Crookshank: Billets which might in certain circumstances be required in various towns for the accommodation of civil servants have been surveyed, and in the course of the present week a warning notice is being handed to householders explaining their position in the matter. I am sending my hon. Friend a copy of the notice in question. The requirements are in my view reasonable and should not impose hardship upon individual householders.

Sir J. Wardlaw-Milne: Will my right hon. and gallent Friend consider whether a little readjustment would make this demand, which is very unfair from the point of view of the householder, much easier of fulfilment, because, after all, these demands are problematical, and people do not know where they are, or how long they may be under notice?

Captain Crookshank: The object of the warning is to give people notice that in certain circumstances they might have to put up with people being billeted upon them.

Mr. Stephen: Will the right hon. and gallant Gentleman put the notice in the OFFICIAL REPORT, so that other hon. Members who are interested may see it?

Captain Crookshank: Yes, Sir; I have no objection.

Following is a copy of the Notice:

"DEFENCE REGULATIONS.

To

(Name)

Occupier of

(Address)

THIS NOTICE IS TO GIVE YOU PRELIMINARY WARNING that in certain circumstances it may become necessary to require you to provide, in the premises above-mentioned, accommodation for persons (in general. Civil Servants). Should it be decided to require this accommodation, a Billeting Notice will be served upon you under Regulation 22 of the Defence Regulations, 1939, and every endeavour will be made to give you as long notice as possible. Circumstances, however, may arise under which it will not be practicable to give you more than twenty-four hours' notice, and it has therefore been thought desirable to notify you of this possibility in advance.

Signed

Billeting Officer authorised by the Minister of Health."

Mr. W. H. Green: asked the Financial Secretary to the Treasury whether he is aware that financial hardship is being experienced by many lower-paid grades in the Civil Service who have been evacuated and are now being stopped, in some cases, 21s. per week for billeting costs, leaving them to pay for a number of meals in addition; and as many of these civil servants, particularly girls whose salaries range from 30s. to 50s. per week, have to meet the cost of fares, and have normally made certain contributions weekly to the home, he will consider some reduction in the stoppage from wages of the present billeting payments?

Captain Crookshank: The payment of 21s. a week to the billetor covers lodging, breakfast and either a mid-day or evening meal. After an initial period of a fortnight non-householders, that is in general single persons, are required to repay this

sum to their Department. It has, however, been agreed with the staff side of the National Whitley Council that there are certain categories of persons who, though technically non-householders, can properly be treated more on the lines laid down for householders. In addition it has been provided that the repayment to the Department by persons, whose wages do not exceed 35s. a week, shall be 14s. a week or less and proposals for a further reduction in the amount of this repayment in the case of civil servants in receipt of less than 35s. a week are at present under discussion with the staff side.

OVERTIME,

Sir R. Glyn: asked the Financial Secretary to the Treasury whether he is aware that in certain Departments working under high pressure there is an abnormal amount of overtime being worked by all grades in the Civil Service, regular and temporary, and that break downs in health are becoming frequent; how many heads of Departments have reported these circumstances; and what steps does he propose to take to redress this state of affairs?

Captain Crookshank: The amount of overtime worked in certain Departments has been abnormal, although it has fortunately not so far occasioned frequent breakdowns in health. Departments are fully alive to the desirability of reducing regular overtime to reasonable limits and the Treasury has never encouraged excessive overtime as an alternative to the engagement of additional staff. It will, however, be appreciated that there is a definite limit to the rate at which new staff can be absorbed and that in certain cases accommodation problems may prevent as rapid an increase as would be desired.

PUBLIC NOTICES (PRESS).

Mr. Bartlett: asked the Financial Secretary to the Treasury whether he is aware of the growing tendency among Government Departments to issue public notices of importance under the guise of news matter; and will he take steps to check a tendency which is detrimental to the Press at a time when general trade restrictions have reduced advertising to a minimum?

Captain Crookshank: No, Sir; but if the hon. Member has any particular case in mind, perhaps he will be good enough to communicate with the Department concerned.

CUSTOMS AND EXCISE (ENTRY).

Mr. Brooke: asked the Financial Secretary to the Treasury whether he will give an assurance that, when entry into the Customs and Excise service by competitive examination is recommenced, the qualifications of those who worked for and satisfied the examiners in the written examination of July, 1939, will not be overlooked?

Captain Crookshank: I am afraid that I cannot anticipate the post-war conditions of entry into this or any other branch of the Civil Service.

Mr. Brooke: Is my right hon. and gallant Friend aware of the keen feelings of these young men who have been working for two years for an examination which is vital to them, and who had completed five-sixths of the whole examination before war broke out?

Captain Crookshank: Yes, Sir, representations have been made to me.

Mr. Maxton: Are you going to do nothing?

Oral Answers to Questions — BANK RATE.

Mr. Stokes: asked the Chancellor of the Exchequer whether he will at an early date inform the House of the identity of the persons who are consulted when the question of changing or maintaining the Bank Rate is under consideration; whether he is satisfied that no individual concerned in the making of such decisions might normally be presumed to have a direct pecuniary interest which the decision might affect; and, in view of the far-reaching effect which such decisions must have on employment and general prosperity, he will endeavour to see that Parliament is consulted before they are made?

Sir J. Simon: The decision as to changing or maintaining the Bank Rate is made by the Court of the Bank of England. It would not be practicable nor, in my opinion, in the public interest to consult Parliament on a matter which requires prompt decision and calls for highly expert and technical knowledge. As to the

second part of the question, I feel able, from my knowledge of the Bank, emphatically to repudiate any such insinuation.

Mr. Stokes: Can the Chancellor of the Exchequer assure the House that no director of any private bank is consulted in this matter, although he may be a director of the Bank of England?

Sir J. Simon: I can assure the House, from such knowledge as I have of the matter, and my predecessors will bear me out, that there is no ground for the suggestion that the Bank Rate is dealt with on any basis but that of the public interest.

Mr. Loftus: Does the answer of the Chancellor of the Exchequer mean that the Treasury disclaim all responsibility for the Bank Rate even to advising a modification?

Sir J. Simon: Matters of that kind are necessarily closely connected with the general study of the financial provisions made by the Treasury, and the hon. Member will find a passage in the Macmillan Report which discusses this topic at length.

Oral Answers to Questions — INCOME TAX.

Sir Irving Albery: asked the Chancellor of the Exchequer whether he is aware of the great hardship caused to many persons of moderate means who are not liable for full Income Tax rates by the deduction of Income Tax at the rate of 10s. in the £from the quarterly dividends paid on certain trustee securities; and why instructions were not issued to make the necessary deduction over the ensuing two quarters instead of making the whole deduction from one dividend payment?

Sir J. Simon: The procedure by which insufficient deductions of tax from payments made earlier in the present year are made good so far as possible by an increased deduction from the next subsequent payment is prescribed by the Sixth Schedule to the Finance (No. 2) Act, 1939. and I am not in a position to give instructions that it should be modified as suggested in the question. I would point out, however, that it is not necessary for a person whose income entitles him to relief from Income Tax


by way of repayment to wait until the end of the year before making any claim. A claim, which would be promptly dealt with, for a repayment on account can be made as soon as it can be shown that some repayment for the year will be due.

Mr. Oliver: asked the Chancellor of the Exchequer whether he will state his intention with respect to persons unable to meet their Income Tax demands by reason of having been compelled, owing to the outbreak of war, to close their practices or businesses or have lost their occupations and are out of employment; and whether it is intended to treat the accrued liability to tax as a deferred debt pending the return of more favourable times for the persons concerned?

Sir J. Simon: Under the existing law and practice taxpayers who are unable to meet their Income Tax demands are afforded ample opportunity of representing their case to the authorities concerned with collection, and they are allowed such latitude in payment as the circumstances warrant. In view of the great variety of individual cases that have to be dealt with it is impossible to lay down any specific rule of general application, but the hon. Member may rest assured that any case of hardship will be sympathetically considered.

Oral Answers to Questions — EXCHANGE EQUALISATION ACCOUNT.

Mr. Maxton: asked the Chancellor of the Exchequer the present position of the Exchange Equalisation Account; whether it is proposed to operate under war conditions as in peace-time; and what is the existing limit of the amount?

Sir J. Simon: As regards the first part of the question, I made a conditional announcement in 1937 that a statement of the position of the Exchange Equalisation Account would be published twice a year, in June and December, and such statements have since been published accordingly. That promise was, however, given in peace-time and I have come to the conclusion that it would not be in the public interest to continue such statements in war-time and that I must, therefore, ask the House to allow me to suspend them for the period of the war. In reply to the second and third parts of the question, I would refer the hon.

Member to Section 1 of the Currency (Defence) Act, 1939, which came into force on the 3rd September. That Section extended the purposes for which the Exchange Equalisation Account might be used and provided that there should be no limit to the amount which might be issued to the Account.

Sir I. Albery: Will the right hon. Gentleman consider whether the statement which is made to the House on the Exchange Equalisation Account twice yearly might be usefully made to the Public Accounts Committee?

Sir J. Simon: There is no intention of altering the present practice by which a statement is made confidentially to the Public Accounts Committee and, of course, to the Comptroller and Auditor-General.

Sir I. Albery: Is the right hon. Gentleman aware that the statement made to the Public Accounts Committee does not give the information which is given to the House?

Sir J. Simon: I think we all have to recognise that in war time statements made on the Exchange Equalisation Account might very easily be of advantage to the enemy, and that we have to exercise a certain amount of restriction.

Mr. Maxton: I take it that I cannot get information from the Chancellor of the Exchequer as to how far his absolutely unlimited power to play with this matter has been used?

Sir J. Simon: I have not been playing with it.

Oral Answers to Questions — PETROL (RATIONING).

Rear-Admiral Sir Murray Sueter: asked the Secretary for Mines whether clergymen who have work to do at some distance from their vicarages and who have scattered parishes are allowed extra petrol by the petrol control officer to enable them to carry out their clerical duties efficiently?

The Secretary for Mines (Mr. Geoffrey Lloyd): Yes, Sir. Divisional petroleum officers have already been instructed to grant to ministers of religion the necessary allowances of petrol to enable them to carry out their essential duties.

Oral Answers to Questions — COAL (RATIONING).

Captain Ramsay: asked the Secretary for Mines whether he will inform the House of the reduction in coal consumption by private consumers which is likely to result if the present rationing remains in force?

Mr. Lloyd: I would refer my hon. and gallant Friend to the reply I gave on Tuesday, 31st October, to the hon. Member for Cheltenham (Mr. Lipson).

Oral Answers to Questions — NATIONAL EXPENDITURE (SELECT COMMITTEE).

Sir Archibald Sinclair: (by Private Notice)asked the Chancellor of the Exchequer whether he can now make any statement on the appointment of a Committee on National Expenditure on the lines suggested in the Motion on the Order Paper in my name and the names of hon. Friends?

[That a Select Committee be set up, similar to that appointed by Parliament in July,1917, to examine the current expenditure defrayed out of moneys provided by Parliament for the Defence Services, including Civil Defence, and to report what, if any, economies, consistent with the execution of the policy decided by the Government, may be effected therein.]

Sir J. Simon: There are two Motions on the Order Paper, that to which the right hon. Gentleman has referred, and another in the name of my hon. Friends.
Hon. Members will recall that in the course of my Budget speech, and on other occasions, I have emphasised the importance which the Government attached to economy in administration, and I have instanced a number of measures which the Government had taken with this object in view. These measures included, for instance, the appointment of highly qualified and experienced business men to particular Departments for the purpose of securing that all new proposals were framed and all operations conducted on the most economical basis. I mentioned also that investigations on the spot were being undertaken in certain Departments by business men, and representatives of the Treasury and the Department concerned, acting in association. This procedure will be further developed, though

naturally the timing of these investigations requires careful consideration in the case of new or rapidly expanding Departments.
While, however, I believe that our procedure is already becoming effective and will rapidly grow in effectiveness, I appreciate the desire of the House to make its own contribution to an end we all have at heart. The Government consider that this object would be best attained by setting up a Select Comittee on National Expenditure with terms of reference which would broadly follow those under which the Select Committee was set up during the last war. The Select Committee would deal with expenditure connected with the war whether civil or military.
The Government will be prepared, at an early date, to propose the appointment of a committee on these lines. The exact terms of reference should, no doubt, be considered in consultation with the various sections of the House, and if my proposal is generally approved I shall be glad to have this matter put in hand.

Oral Answers to Questions — WAR CABINET.

Sir Annesley Somerville: (by Private Notice)asked the Prime Minister whether he can make a statement as to the position of the Defence Ministers as Members of the War Cabinet?

The Prime Minister (Mr. Chamberlain): My attention has been called to a statement recently made in a newspaper to the effect that there is now an Inner Cabinet composed of the Prime Minister, the Foreign Secretary, the Chancellor of the Exchequer and the Lord Privy Seal, whose decisions are withheld from the Defence Ministers until they come before the War Cabinet in the form of recommendations. The statement is entirely without foundation. I cannot too strongly deprecate the publication in war time of such malicious inventions which, while they may do little harm in this country provide enemy propagandists with precisely the kind of material for which they are constantly seeking.

Sir A. Somerville: Can the Prime Minister tell us the name of the newspaper in which this statement appeared?

The Prime Minister: It was the "News Chronicle."

Mr. N. Maclean: On a point of Order, Mr. Speaker. Is it the usual custom in this House for an hon. Member to rise and ask the name of a paper which has given a certain statement?

Mr. Speaker: There is nothing unusual in it.

Mr. Thome: May I ask you whether you are aware, Mr. Speaker, that sometimes when hon. Members hand in questions at the Table, when the questions mention newspapers they are not allowed?

Mr. Speaker: That is a rather different matter.

Mr. Lawson: May I ask whether it is usual to have Private Notice questions about statements in newspapers?

Mr. Speaker: The question was not about a statement in a newspaper.

Mr. Maclean: Further to my point of Order. If hon. Members are not permitted to give the name of a paper from which they are drawing a question, why is it that the same thing can be given in a supplementary question asked across the Floor of the House? If it is not in order in one case, why is it in order in another?

Mr. Speaker: It depends upon what the answer is. A supplementary question is put in order to elucidate further an answer which has already been given, and the supplementary question should be in order if it has arisen from the answer. Further, in this case a newspaper statement was mentioned in the answer, and it is only reasonable that the hon. Member should ask the name of it.

Mr. Maclean: Is it not the case that if a newspaper may be mentioned in the answer to the original question, it should be permitted to be mentioned in that question?

Mr. Speaker: That does not follow.

Oral Answers to Questions — INDIA (GOVERNMENT).

Mr. Wedgwood Benn: (by Private Notice)asked the Under-Secretary of State for India, whether His Majesty's Government have any statement to make on the position in India as disclosed by the announcement and correspondence published by the Governor-General which appeared in Monday's newspapers?

The Under-Secretary of State for India (Sir Hugh O'Neill): It is difficult to answer the right hon. Gentleman's question in a form which would not run to undue length for an answer to a Private Notice Question. But my Noble Friend the Secretary of State is making, this afternoon, a full statement of the Government's position on this important matter in another place, of which I propose to give this House the salient points.
I need hardly say that His Majesty's Government share the profound regret of the Governor-General at the failure of consultations which he has been holding during the last week to produce an agreement between representatives of the Congress on the one hand and of the All-India Moslem League on the other. The general position, as the House is no doubt aware, is that the Congress Party still insist that, unless His Majesty's Government can make a declaration in the sense they have been demanding, they cannot consider any plan of the kind which the Governor-General had invited them to consider.
His Majesty's Government find it impossible to accept this position. The longstanding British connection with India has left His Majesty's Government with obligations towards her which it is impossible for them to shed by disinteresting themselves wholly in the shaping of her future form of government. Moreover, one outstanding result of the recent discussions in which the Governor-General has been engaged with representatives of all parties and interests in India has been to establish beyond doubt the fact that a declaration in the sense proposed, with the summary abandonment by His Majesty's Government of their position in India, would be far from acceptable to large sections of the population. But this does not mean that we have in any sense weakened in our determination to assist India by such means as are in our power to reach without avoidable delay the position in the British Commonwealth of Nations to which we are pledged; and the Governor-General has made it clear that he is not deterred by his present failure from hoping for a reconsideration by the parties interested, and His Majesty's Government warmly approve the readiness which he has expressed to be of such service as he can whenever opportunity offers.
Meanwhile the position at the moment in the Provinces is that, while in three Provinces where the Congress has not been in power the Ministries remain in office, in five of the remainder the Congress Ministries have resigned, and in the remaining three they appear to be on the point of doing so. The Governors have accordingly had no option but to assume to themselves by proclamation the powers which provisions in the Act enable them to assume in such a situation. But let me make it plain that Section 93 of the Act under which this action has been taken is in so sense a penal provision; it simply provides the machinery, the possible necessity for which Parliament foresaw for dealing with a situation of this kind, for carrying on the King's Government.
It is our hope that, in the absence of opposition from the supporters of Congress or from other quarters, the Governors with the aid of their official advisers and the members of the public services will succeed in conducting smoothly and efficiently the administration of the Provinces, the difference being—obviously a fundamental difference—that their actions will be decided in responsibility to this House and not in pursuance of advice tendered to them by Ministers responsible to a Provincial Legislature. We greatly regret that the Ministries which have with so much zeal been carrying on the government of their great Provinces and tackling with energy and resource the many problems with which administration has naturally brought them into contact should have found it necessary to withhold their further services from their country. But we refuse to believe that this withdrawal will be for long, and we shall continue to hope, so long as any grounds for such hope remain, that the Proclamations by the Governors need have only a temporary duration, for I can assure the House that the Governors will be only too ready to recall to their counsels responsible advisers as soon as they are available.

Mr. Benn: May I ask the right hon. Baronet two questions arising out of that reply? First, is it not possible by further discussion with Congress to overcome these difficulties about the scope and constitution of this Constituent Assembly at the end of the war?

Secondly, do the Government realise what a serious and almost impossible responsibility it is to lay upon this House to undertake support of, or criticism of a Governor who is attempting to carry on, in these difficult circumstances, the administration of these Provinces?

Sir H. O'Neill: With regard to the right hon. Gentleman's question about an assembly or conference, I am sure the Viceroy would be only too glad to help in any way by which he thought that anything like general agreement could be reached in this difficult situation.

Sir J. Wardlaw-Milne: Arising out of the statement, may I ask the Prime Minister whether he will consider the desirability of sending to the various Provincial Governments in India a request from this House as a whole—one which, I believe, would be supported by Members of all parties—that the position should be reconsidered and that, in this time of war and strain they should not come to an immediate decision to resign but should continue to negotiate with the Governor-General in the hope that some settlement can be arrived at? I believe that if a request were made from the House of Commons as a whole to the Provincial Governments to carry on during the war it might have a very great effect in India.

Mr. Graham White: May I ask the right hon. Gentleman whether the Government of India and the Secretary of State have, in fact, had an opportunity of considering in detail the proposals, whatever they may be, for an assembly? Have details of these proposals been submitted to them by the Congress Party?

Sir H. O'Neill: No, Sir.

Mr. White: Would it not be possible to ask that these details should be furnished, so that they might be considered?

Sir H. O'Neill: I think the position which the Congress leaders have taken up so far is that they do not feel themselves able to enter in any such discussions, unless the Government agree, as a preliminary, to give a declaration, in the sense which they desire.

Mr. Benn: Is there really so much difference between the statement made by the Congress Working Committee and the real interpretation of the 1926 pact;


and is it not possible by discussion with Congress to make it plain to them that within the ambit of what is agreed policy in this House, their desires might be met?

Sir H. O'Neill: I think the right hon. Gentleman will gather from my original reply that the Viceroy is only too anxious to keep the door open for any discussion.

Mr. Grenfell: Are we to understand from the Under-Secretary's statement to the effect that the Government are not deterred by the failure of the negotiations, that the Government may assume the initiative in re-opening the negotiations on a new basis?

Sir H. O'Neill: The Viceroy has already stated that he would be only too glad to discuss the matter with the representatives of Congress, and also with the representatives of the minorities, if they can show that there is any chance of agreement.

Mr. Gallacher: Is the Minister not aware that while there may be differences of opinion, Congress represents the great mass of the Indian people and that their demands will have to be met sooner or later; and would it not be better to meet their demands right now by making the declaration that is asked for?

Orders of the Day — WAYS AND MEANS.

Considered in Committee.

[Sir DENNIS HERBERT in the Chair.]

NATIONAL LOANS.

4.0 p.m.

The Chancellor of the Exchequer (Sir John Simon): I beg to move,
That—

(1) The Treasury may borrow in such manner as they think lit on the security of the Consolidated Fund—

(a)any sums required for raising any supply granted to His Majesty for the service of the year ending the thirty-first day of March, nineteen hundred and forty; and
(b) an additional sum not exceeding two hundred and fifty million pounds; and
(c) any sums required for the repayment of any maturing securities issued or deemed to have been issued under the War Loan Acts, 1914 to 1919, or any provision thereof or issued under any Act of the present Session for giving effect to this Resolution, or of any Treasury bills or ways and means advances;
(2) the Treasury may, for the purpose of carrying out any arrangement for the exchange of Government securities, create and issue new securities and undertake to make payments to holders of securities surrendered in pursuance of the arrangement;
(3) any Act of the present Session for giving effect to the foregoing provisions of this Resolution may contain any provisions incidental thereto or consequential thereon, including, in particular, provisions—

(a)charging on the Consolidated Fund—

(i) the principal of and interest on securities issued under the Act;
(ii) any expenses incurred in connection with the raising of money or the issue or redemption of securities under the Act;
(iii) any remuneration payable to the Bank of England or the Bank of Ireland in respect of the management of securities issued under the Act;
(iv) any money required for the purpose of any sinking fund established under the Act or for the purpose of carrying out any such arrangement for the exchange of securities as aforesaid;
(b) authorising the payment into the Exchequer of any money received by the Treasury in pursuance of any such arrangement;
(c) enabling money raised by the issue of national savings certificates to be applied for any purpose for which money may be raised under the Act;

(d)authorising the Treasury to borrow under the Act money which, by virtue of any other Act, they are authorised to> borrow under Sub-section (1) of Section, one of the War Loan Act, 1919."
This is a Ways and Means Resolution upon which it is proposed to found a Bill with the title of the National Loans Bill. The Bill will give to the Treasury-powers of borrowing similar to those which were given by the War Loan Acts passed annually during the last war. Indeed it is possible to trace the record of this practice further back than the last war, for there were similar War Loan Acts passed by Parliament in 1900, 1901 and 1902, to authorise the necessary borrowing for the prosecution of the Boer War. The Committee will understand that legislative provisions of this sort are empowering provisions. They are limited to conferring powers on the Treasury and to authorising machinery for the issue and service of securities which may be created under such powers. It would be quite contrary to precedent, and indeed it would be quite impracticable, to legislate specifically for a particular loan, with defined terms and date and period, to be raised in the future. The terms and conditions of such a loan must necessarily be left to be decided in the light of the best advice that can be obtained, and announced at the moment when the loan is being issued. I do not think hon. Members will question the wisdom of that view. If you were indeed to attempt such specific loan legislation, with all the details set out, and then pass such legislation through its various stages—the Financial Resolution, Second Reading, Committee, Report and all the rest of it—of course, the interval would give an opportunity which might easily be abused, with the result that by the time the loan was issued the terms and conditions would be unsuitable.
It is obviously not in the public interest that the terms of a future loan should be the subject of Debate and discussion before the issue is made. Therefore it has always been the accepted principle, going back to the Boer War and the war of 20 years ago, that what the Government must do in war-time is to acquire all the necessary powers, and then it is their responsibility—it is a very grave responsibility—to use those powers to the best advantage of the State. Another point that I wish to mention to those who


are interested in this unusual subject is that, apart from the legislation I am now asking. authority to introduce, the Treasury would have no adequate powers to raise new money for the purpose of prosecuting the war. There are a certain number of limited and special standing powers which Parliament has given to the Treasury. I have had a list of them made. It is a technical matter and it would be perhaps dull to go through the items. But I will give an example.
The current Consolidated Fund Bill confers power to borrow by the issue of Treasury bills repayable in the same financial year; and there are one or two other cases. But it has always been recognised, and it is plainly right, that the authority for what are called large war borrowings, general authority such as the present Resolution proposes to confer, is desirable and indeed necessary. Instead -of trying to piece together out of the Statute Book, with all sorts of references back, odds and ends of authority—instead of trying to do your business by that means it is very much better to authorise and pass into law a National Loans Bill which will be self-contained, which will be the direct authority for what is to be done and will of course be set out, in the documents that are issued when the loan or the loans are created, as the statutory authority. That Bill I am now seeking to introduce.
There is one other general observation which I think hon. Members may be glad for me to make. It is true that I am asking for a Bill which gives authority for war borrowing. At the same time it is possible to limit what I am asking now to a period in time, to a single year; and I think it is plain that Parliament would not wish to give a wider authority than that. If hon. Members will look at this Resolution—it is rather forbidding in appearance, but that cannot be helped—they will see that it starts by saying:
The Treasury may borrow in such manner as they think fit on the security of the Consolidated Fund—
(a)any sums required for raising any supply granted to His Majesty for the service of the year ending the thirty-first day of March, nineteen hundred and forty.
Hon. Members will appreciate that if you simply take that sub-paragraph (a,)which is power to borrow in respect of supply up to 31st March, 1940, then any

borrowing would have to take place before that date is reached. In the Resolution, therefore, there is paragraph (b)which gives power to borrow:
an additional sum not exceeding two hundred and fifty million pounds.
That additional sum corresponds to the additional sum which was authorised in the late war in each of the War Loan Acts, from 1915 to 1919. The reason for it is that any borrowing under sub-paragraph (a)must necessarily be effected during the present financial year, and if things so developed that you wanted to exercise the power of borrowing after 31st March next but before the next year's Loans Bill is carried, you must secure now a certain latitude, which is thus defined. Of course under sub-paragraph (a) the total authority is very large. It is.really quite impossible to suppose that we are seeking to borrow the whole of this year's supply—-I have been imposing the most stringent taxation in order to raise a very large part of it. But there is no other convenient limit to put into the Act of Parliament. You have to provide for the possibilities of unexpected events, and it has always been found that it is impossible to say in advance exactly where the line should be drawn in these Bills. The best thing to do is to take the amount of supply voted this year and add to it further authority which can be utilised after 31st March next year.
I ask hon. Members to turn next to paragraph (1, c), power to borrow for the purpose of repayment of securities already issued. That power is, of course, already existing. We have not issued securities without having power to borrow for the purpose of paying them back. The question is, which is the better course—to have a Bill all ready which is quite self-contained, which anyone can read without looking back, or to legislate by reference to past Acts. It seems better not to have any unnecessary references back to earlier Acts. So I propose in the Bill that we should repeal the old existing powers.

Mr. Graham White: Does that also cover loans under the Trade Facilities Act, all liabilities that there may be within the period of the Bill?

Sir J. Simon: As to that I shall inform myself more precisely. I do not think so. It was not what I had in mind, but I will look into the matter and make quite


sure. I was thinking primarily of the ordinary provision by which we may borrow to repay securities which have been already issued. Paragraph (2) of the Resolution is a technical paragraph. It makes provision for powers which would be necessary in the event of a conversion of securities. Paragraph 3 of the Resolution is also a technical paragraph and I do not think the Committee will wish me to go right through it, but there are one or two points I might bring out. The effect of paragraph (3) is pretty clear in the language in which it is expressed. I ask hon. Members to look at sub-paragraph (3, c). That enables money raised by the issue of National Service Certificates to be applied for any purpose for which money may be raised under the Act. That is a widening of existing authority.
As things stand under the present law, which was passed in times of peace, the proceeds of such certificates must be applied to the redemption of debt. I must not, of course, anticipate the precise use which may be made of these powers, but I would remind the Committee that I said in my Budget speech—the observation, I believe, was received with general approval—that it was our intention, when the time came to borrow, to appeal to the smaller investor who has got certain savings as well as to the man and the institution with great possessions. This provision in paragraph (3, c) is devised partly with that in view, because I think it is right that the citizen of small means —a very important part of the community —who makes his contribution, a modest contribution, through the medium of National Savings Certificates, should feel that by so doing he, no less than his richer fellow-citizen, is securing that his contribution, however small, is going directly for the purpose of fighting and winning the war. I do not think it would be very much consolation to the small man to say to him, "Will you take this certificate and help to pay off the National Debt?" What we want him to feel is that he is helping to win the war.
Lastly, under paragraph (3, d,)you get a reference which I think needs a little explanation. I ask that the Bill should include a provision authorising the Treasury to borrow under the new Act

money which, by virtue of any other Act, they are authorised to borrow under Subsection (1) of Section one of the War Loan Act, 1919.
That is rather an elaborate phrase, but it is designed again to secure simplicity. That Sub-section (1) of Section 1 of the War Loan Act, 1919, is the last enactment of that class on the Statute Book at present, and it is referred to in a great many provisions of recent years, as being the reference to which it is most convenient to turn for the purpose of defining powers when taken for new purposes. If we were to keep that going, it would mean that everybody would have to turn back to the Act of 1919, and what I am proposing to do, is to repeal all those references in a Schedule to the new Bill, and in place of them to make the reference to this new Act. All that is for the purpose of making the job as simple as it can be and not having to go back into ancient and rather technical matters. There are many cases where Parliament has authorised the Treasury for some specific purpose to borrow, as the phraseology runs,
in any manner in which the Treasury are authorised to raise money
under the Act of 1919. The provision in the Resolution, of course, substitutes a reference to the new Act for the reference to the Act of 1919, and it secures that the definition of borrowing powers authorised to be exercised shall be made by reference to what will be the latest Act on the subject. In effect, the new Act will take the place of the Act of 1919. When the Bill is introduced hon. Members will find that, by the Schedule, we have knocked on the head the authority of the older Act in relation to the Scheduled provisions.
I had better tell the Committee that one of the Acts which will be included in that Schedule will be the Defence Loans Act of 1937. That was the Act under which we were going to borrow, under which we did get power to borrow, £400,000,000 in connection with the £1,500,000,000 for rearmament which was then the prospect. After that, by an amending Act in the spring of this year, that £400,000,000 was increased to a total of £800,000,000. The situation about the borrowing under that Act is as follows: the powers conferred by those two Defence Loans Acts have been or will be used to the extent of £695,000,000


out of the £800,000,000, and of this £695,000,000, £502,000,000 is in respect of the present financial year and is actually being borrowed under the Defence Loans Acts. The authority was given when we passed the Estimates. There thus remains unused under those Defence Loans Acts a balance of £105,000,000. It would be far more convenient, in place of following the special procedure of the Defence Loans Act, for this balance to be merged into the general powers which the new Bill will provide. As I have said, I propose to include the Defence Loans Act as one of those which will be repealed.
I have slated to the Committee as well as I can the contents of this plan, and I have gone through the terms of the Resolution. I am well aware that the matter is technical and that the explanation is tedious, but it is a matter of general importance. It is a proposal really to confer powers, not to exercise them. I think it must be admitted that it is absolutely necessary to confer these powers on the Treasury, and, as I have explained, they follow precisely in their general character the powers conferred by the War Loans Acts in past wars. Hon. Members may, perhaps, want to have the Bill in their hands in order to appreciate fully the provisions contemplated, but I hope I have explained and made clear the reasons why the Financial Resolution is framed as it is.

4.22 p.m.

Mr. Pethick-Lawrence: It would be impossible to over-estimate the importance of what we are doing to-day. As I see it, and as everyone with imagination must see it, we are starting here, in this House of Commons, the major operation of the war, for without an adequate financial basis every war must fail. In other days our task would have been described graphically as providing the "sinews of war," for then men with strong arms prevailed. In the last war we thought in terms of rifles, and the phrase was coined of the "silver bullets" which the Chancellor of the Exchequer required. In our modern, air-minded age, "silver wings" is perhaps the up-to-date equivalent. The task which the Chancellor has to set before the nation is indeed colossal, and heavy is his responsibility. Faulty finance might not, perhaps, lose us the war—it did not lose us the last war—but

it would certainly blast the hopes of a prosperous peace.
I will preface with a few general remarks what I have to say on the Financial Resolution. In the first place, the outbreak of war creates dislocation, and one of the objects of sound war finance is to end that dislocation and to enmesh the whole of our resources in a common effort. So far this has not been done, and we look to the Chancellor of the Exchequer and his colleagues to achieve it with the minimum of delay. Secondly, war causes great inequalities of sacrifice. War finance cannot completely cure these, because they are inherent in our system, but it ought to mitigate and not to aggravate them, and again it is up to the Chancellor of the Exchequer to bring this about. Next, there are many pitfalls for finance in war time, and unfortunately the last war exhibited them all. There is the danger of extravagant charges for Government contracts, there is the danger of inadequate taxation, there is the danger of cumulative inflation, and, finally, there is the danger of high and rising rates of interest on Government loans.
Without going into details as to the first three, I think I am well within the mark and should be supported by expert opinion when I say that in the last war the combined and cumulative effect of these dangers was to swell the cost of the war by at least £2,000,000,000 and in consequence to add to the National Debt over £7,000,000,000, instead of under £5,000,000,000, which would otherwise have been the case. As to the fourth, the rate of interest, which is strictly germane to to-day's discussion, I would remind the Committee that during the last war the rate of interest on long-term loans ranged from 4 to something like 6 per cent. Had it instead ranged from 2 to 3 per cent., or, as I would rather express it, for reasons which I shall explain later, from 3 to 2 per cent., the avoidance of all these dangers together would have meant that at the end of the war we should have had to face, not an annual debt charge of over £300,000,000, but one of less than £150,000,000, a totally different proposition.
Now let us see where we are going in the present war. In some respects we are starting where the last war left off. In fact, I sometimes feel as if we have been living in a dream during these last 20 years and that we have now awakened


to a continuance of the horrid reality. At the end of the last war we were spending somewhere about £2,000,000,000 a year upon its prosecution, and I imagine that we are spending roughly at that rate at the present time. If the war lasts three years, and if we were to fall into the same errors again this time, then by the third year we might very easily be spending at the rate of £5,000,000,000 a year, and if that were to be borrowed at 6 per cent., then, in one single year, we Should be adding a post-war annual charge of no less than £300,000,000, which was the amount added in the whole course of the last war. I am sure that there is not a single Member of this House who will dissent from me when I say that that is indeed a terrible prospect, but it is no good shutting our eyes to the fact; it is no good vaguely believing that it will not happen. It is up to the Chancellor of the Exchequer and to us in the House of Commons to insist that it does not happen.
How is that to be done? It depends very largely on how the Chancellor of the Exchequer uses the powers which he is asking us to give him to-day. Extravagant costs do not come directly within the purview of this Resolution, but as the Chancellor referred to them earlier this afternoon perhaps I may say a word on the matter. It is vital that they should be checked, and it is of great importance, that the House of Commons should take a hand in the matter, but there are a few words of warning with regard to this Select Committee which I feel it is incumbent on me to utter. In the first place, the Government must not think that they can in any way shelve or hand over their responsibility to this committee and shelter behind it. The main responsibility for checking extravagance must rest with them, and them alone. Secondly, those with whom I am associated would hesitate to be parties to a Select Committee which would have a roving commission, like what is known as the Geddes or May Committees, which would cover the whole type of national expenditure and which would be likely to recommend cuts at the expense of the people for whom we have a special responsibility.
I do not propose to say much about taxation in general for it was the main subject of the Budget a few weeks ago. On the whole I do not dissent from the view of the Chancellor that it made nearly

as heavy an inroad as was possible at that time into the incomes of the population. At the appropriate point I will reexamine one aspect of this question. I come to the question of inflation. One of the main causes of inflation in the last war was the way in which the joint stock banks were encouraged to lend money to their clients to lend to the Government. As a result of this and other financial methods, the banks more than doubled their deposits and their advances and made huge profits, which were masked at the time by the falling value of securities. The important point to note is that they did all this on Government money and on Government credit. I do not know precisely how the joint stock banks' deposits and advances stand at the moment, because the returns are confusing, but there is reason to think that they are already rising considerably. The Government can take steps to limit this increase or to secure that the advantage falls to the nation and not to private individuals or to companies. One of the causes of inflation was due to the War Debt being sold to the public in such great chunks at a time that they could not be fully digested, and in order to make it possible for them to be taken up the banks were called upon to intervene and lend the money to the public. One of the means, therefore, by which a similar inflation can be checked in future will be for the Chancellor to issue War Loan, or whatever it may be, in smaller parcels or in the form of perhaps continuously running Treasury bonds "on tap," as they were called during the last war.
Meanwhile, during the last war the Bank Rate stood consistently between 5 and 6 per cent. Nothing like this must be allowed to happen again. I am one of those who think that the Bank Rate ought never to have gone up to 4 per cent., as it did at the beginning of this war, but whether my view be accepted or not, I congratulate the Chancellor upon getting it down to 2 per cent. again, with Treasury bills down to something like a discount rate of £1 4s. per cent. per annum. I am not sure that the Chancellor ought to rest content there. There is no particular merit about 2 per cent., and there is no reason why in the days in front of us he should not bring it down even lower than that, to 1½or possibly even to 1 per cent. The rate of interest paid by banks to depositors is at present


½ per cent. There is no reason why it should not fall even to zero, and no reason why the Treasury bill rate should not fall to the 4s. leaving the £1 out of the picture. The Committee will remember that it is not long since the Treasury bill rate was not far removed from ½per cent., or, in the phraseology I have been using, 10s. per cent. per annum. There is an alternative to all that: the Government might short-circuit the whole procedure. That would mean a considerable change, but sometimes considerable changes have to be adopted in the course of a war.
All that brings me to the point, the most important of all, namely, the question at what rate of interest long-term War Loan will be issued. In the last war the investor was coaxed and bribed by high and rising rates of interest. I will not stop to examine whether there were alternatives to that course even in those days, but it is clear that it is not necessary to pursue that policy at the present time. The Government have great powers and I venture to think that they will have the support of public opinion—not merely ill-informed public opinion, but opinion inside financial circles—for making the rates of interest low, and, what may perhaps be still more important, for reducing it as the war goes on. It may be said, of course, that even if the investor be prevented from doing better for himself in other investments, he may prefer to spend the money as he gets it on himself and not to save at all. The Government can stop up this leak by sumptuary legislation, if necessary, as they have in effect done in the matter of petrol. We have also to remember that the pool from which this money must ultimately come is immense. It is no other than the whole proceeds of Government expenditure, which must in course of time filter down into the pockets of the public and cannot all be spent on personal satisfaction at the time.
I am proposing that the Government should use power not merely to keep down, but to lower as the war goes on the general rate of interest. The reverse side of that picture, of course, is the raising of the capital value of gilt-edged securities. I pause to point out that the raising of the capital value of gilt-edged securities will be very welcome to most persons at present in possession of wealth. It is in strict contrast to the crushing

depreciation imposed during the last war, when Consols fell nearly to 50, with other gilt-edged securities similarly depressed. I will return to this point shortly. The present interest rate on gilt-edged securities is in the neighbourhood of 3¾ per cent. I would warn the Chancellor that the public will be utterly dissatisfied, and rightfully, if the first War Loan be floated at this rate or even round 3½ per cent. The rate ought to be considerably lower. The point, however, which I am specially stressing is that during the progress of the war it ought continuously to fall. If it starts at 3 per cent., it ought to be made to go down to 2½ per cent., and even to 2 per cent. before the war is over.
I come to the second paragraph of the Resolution dealing with the exchange of securities. I assume that this relates to the necessity of finding foreign exchange to pay for purchases from abroad, which we are no longer able to buy "on tick" as we did in the last war. We must, therefore, pay for what we get from other countries either by our exports, or by gold, or by offering what are known as dollar securities. It is worth while turning aside for a moment to examine a new technique which the German Government have discovered for obtaining foreign exchange. Hon. Members will have noticed that they are bringing home to the Fatherland, or to other parts of their newly acquired provinces, German persons from the northern countries. The financial arrangements of the transfer are that those persons are able to carry next to nothing with them as cash, and they leave behind them their property, which has at some subsequent time to be liquidated. The whole of that liquidation creates foreign exchange for the German Government. I have seen an estimate in reference to persons returning from the Baltic countries put at something between £50,000,000 and £100,000,000. I have no means of checking the figure, but I can well believe that the amount will be considerable. German technique may not stop there, and they boast that it will not stop there. They are talking about pursuing -a similar policy in south-east Europe. If they do that they may not get the apparent advantage of a few tens of millions; they may get foreign exchange to the tune of hundreds of millions, and it will be their object by that means to finance their imports by what is, in


effect, a capital transaction during the war without providing any corresponding exports. Our Government must see what they can do to reduce the effect of this, partly by diplomatic and partly by economic policy. The point, of course, is to reduce the amount available for imports into Germany during the war.
Obviously we cannot imitate the German example in our own case. What our Government have actually done is to ask for a register of dollar securities, on which, no doubt, they will subsequently base a requisition. On that two points arise. First, is the register substantially complete? Have we really got a full list of all holdings of British nationals in dollar securities? I am told that it is very far from complete. I suggest to the Government there are several ways in which they can overcome this secrecy and evasion. I do not think they are a wise matter for public discussion inside this Committee, but I have no doubt the Government are aware of them. I believe it would be the universal opinion that it is utterly unfair, when some people have correctly and patriotically disclosed their holdings, that others should be illegally withholding that information and continuing not only to hold their securities undisclosed but making illicit profits from them. I am not one of those who love to see people punished, and it is not prosecution and punishment that I want. What I want the Government to do, even though they may have to take drastic steps to do it, is to complete this register. Those who have hitherto evaded their duty should be given to understand that it is their business forthwith to furnish the information, and to make restitution both as to the amount and as to the profits that have already been made.
The second point that arises on this question is, In what form are we going to requisition these securities that are so essential to us for purchasing the products of foreign lands? Some people may say, "Commandeer them." I am not one of those who take that view. It seems to me that it would be flagrantly unjust and unfair, because there is nothing irregular or improper in a person holding foreign securities.

The Chairman: For the sake of future speakers in the Debate, I think it is desirable that I should give some indication of what will not be in order. The

right hon. Gentleman will realise that this Resolution deals only with Government securities. He is referring to investments held abroad. I do not complain of his making a reference to that subject in the way he did, but he must not go into the question of how the marshalling of foreign investments generally is to be dealt with.

Mr. Pethick-Lawrence: I quite appreciate your point, Sir Dennis, and will endeavour to keep strictly within your Ruling, but Sub-section (2) of the Resolution is precisely concerned with this point. As I understand it, it is the purpose of that Sub-section to create fresh securities and to give them to the holders of dollar securities in exchange.

Sir J. Simon: I hesitated whether I should interrupt before, because I did not wish to do so, finding what the right hon. Gentleman was saying was very interesting, but he is under a misapprehension. As I said when I explained the Resolution, paragraph (2) is providing for the possibility of conversion. It has nothing to do with the requisitioning of dollar securities. The requisitioning of foreign securities like dollar securities is provided for under powers which exist now. We do not want any Act of Parliament for the purpose. They are paid for in cash out of the Exchange Account. I do not wish to put any limit upon what the right hon. Gentleman says, because it is very interesting and informative, but it is an error to suppose that paragraph (2) of the Resolution has anything to do with the requisitioning of dollar securities.

The Chairman: That is what I meant when I said that the Resolution dealt only with Government securities. Perhaps I should have said British Government securities.

Mr. Pethick-Lawrence: I am sorry that I have transgressed beyond the bounds of order. Perhaps you will allow me. Sir Dennis, in order just to complete the matter, to put it rather more briefly than I had intended. The Chancellor now explains that the matter of raising Government securities in order subsequently to exchange them for dollar securities is not covered by this particular Resolution. I will only say that it is quite clear that it is the intention of the Government to take that course, and that we on these benches say that the right


method to meet this difficulty would be to impose a special tax on all capital wealth to pay for it. I suggested this before the war, and I was told that there were two objections, first, that cash was wanted then and not capital, and, secondly, that it would depress stock prices. To-day, of course, it is capital that will be required and not cash. I pointed out earlier that the effect of the policy of lowering the rate of interest and keeping up the exchange value of gilt-edged securities in particular will be to enhance the property of. those who have wealth at the present time. Therefore, it is by no means unreasonable that, as a sort of set-off against the great gains they will get out of this policy, those people should be called upon for a special contribution out of capital to the Exchequer.
To sum up, the policy I have been endeavouring to put forward consists of the following items: First, I want to limit inflation. Secondly, I want to lower still further the short-term money rates. Thirdly, I want to force up the price of gilt-edged securities and so bring down the rate of interest. Fourthly, I want to have the loans floated in moderate parcels, at low and decreasing rates of interest. Fifthly, as part of the scheme for taking foreign exchange, I want a special tax on capital wealth.
Those are admittedly drastic proposals, but in my opinion they are neither unfair nor impracticable. I believe they will commend themselves not merely to un-instructed persons but to persons of high financial standing, and, indeed, some of them have already secured such approval. If they are adopted they will do something to make the sacrifices of the war less unequal. Do not let us forget that at the present time large numbers of men are being ruined by the war—I am not talking of physical or mental sacrifices, but of financial and economic sacrifices—-and large numbers of others are being called upon to make huge financial sacrifices. Only if we limit the gains of others in some such way as I have described can we justify the sacrifices of these people. Only if we do this have we any chance of asking the public of all classes not to make their little bit for themselves out of the War when they see their chance.
I hesitate to describe the consequences if this line is not taken. If vast fortunes are made out of this war, as they were out of the last, it is no use to pretend that matters can be put right afterwards by clawing back some of the proceeds by taxation. The proposals which the Chancellor gave in outline earlier in our Debate are still in the same nebulous stage, and so far he has declined to clothe them with anything like greater material shape. If the Government allow things to drift now they are making certain that a condition of grave internal instability will arise when the war is over. I am not going to paint a picture of civil commotion, or anything of that kind, but I remember very well a very cogent and true remark made by the Prime Minister himself only a few weeks ago in another connection. He said that the British people were slow to be roused to action but, when once roused, they were very resolute. I content myself by saying that if by the financial policy by which this war is carried through grave social and economic inequalities existing before the war are aggravated at its conclusion, disunity will have been created inside this country which those who have created it will one day bitterly regret.

4.58 p.m.

Mr. White: May I, like the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence), preface the brief observations I shall address to the Committee by saying with what satisfaction we heard earlier in the day of the proposal to appoint a Select Committee to deal with certain aspects of war expenditure. It is a course which has been advocated by us on these benches and to which we have attached, and do attach, great importance, simply because a similar instrument was found to be of great value in the height of the expenditure of the last war. We certainly have not in mind, and would not support for a moment, the idea of a committee with a roving commission let loose and at large upon the Government finances. I remember reading some years ago a letter from Lord Randolph Churchill, one of the right hon. Gentleman's predecessors at the Treasury, written to a colleague, in which he said that he would like to let the House of Commons loose on the Departments. The picture of the House of Commons arming itself with economy axes and rushing


upon the Departments is one which would fill me, at all events, with terror, but I do think that a committee of the kind which is in mind may prove very valuable and useful. We had no idea that this was to be a hostile committee in any sense. It was to be a committee of co-operation rather than one which would set out with hostile intention to attack anything and everything. Already there has been support for it in the House and we are glad that the Chancellor of the Exchequer and the Government have seen their way to appoint it.
I have always felt it to be a great misfortune that, when we are dealing with technical matters, as we are doing to-day, involving enormous transactions affecting the lives of everyone in this country, we should have to discuss them in such terms as are set out on the Order Paper, because very few people can understand them. The right hon. Gentleman did his best to explain to us the machinery which is employed to raise these sums of money. I associate myself with what the right hon. Gentleman said on the necessity for low interest rates. I do not think there is any occasion to adopt extraordinary powers for that purpose, if I understand the spirit of the people aright on this occasion. I believe that people are prepared, in the city and elsewhere, those who have money, whoever they may be, to play their part in the war. This is not a war with any glamour about it. It is a dour business. I do not know whether anybody will make a fortune out of it, but if he does I think he will be heartily ashamed of himself. I agree with the financing of the war at low interest rates. It would certainly be impossible to contemplate a state of things in which we had rates advancing steadily as the war went on, because we should speedily find ourselves in a position where the National Debt had grown to such an extent that some form of repudiation would follow.
I was surprised, with regard to the arrangement mentioned in paragraph 2 of the Financial Resolution, for the exchange of Government securities, to hear the right hon. Gentleman the Member for East Edinburgh say that the list of such securities was incomplete and that there had been evasion. If that is so, I hope that the gaps will be speedily filled up and that any evasion will be dealt with, I was surprised to hear him say it be-

cause I fail to understand how anybody could evade unless he were prepared to forego the pleasure of receiving any income from it.

Mr. Pethick-Lawrence: He can have the income from it paid to his account in a foreign bank and he can postpone transferring the money to this country until a suitable time.

Mr. White: Only if he were nonresident in this country.

Mr. Pethick-Lawrence: No.

The Chairman: I hope that the hon. Member and others will forgive me interrupting again, but I am obliged to point out that the subject upon which the hon. Member is now speaking cannot be pursued.

Mr. White: I only wished to make a passing reference to the matter and to express surprise at the importance attached to it by the right hon. Gentleman. I do not wish to argue the matter in any way, but I express the hope that if there are such people means will be found of bringing them to book. If we proceeded to raise interest rates we should find that the burden would be unbearable. Nevertheless, our supreme purpose is now to divert from civil expenditure such money and resources as we possibly can and to raise money by loan from actual savings, and, as much as possible, from taxation. It is only in that way that we can avoid the dangers of inflation, which fall with such severity, and without any justice, as between one section of the community and another.
The prospect of being able to raise loans much more favourably than when we discussed the Budget is another matter to which I would refer. It is true that we do not know what is in the mind of the Government with regard to the loans nor with regard to the effective use to be made of the mobilisation of the securities which have been registered ready for mobilisation. We have, in the Resolution, some indication of the ceiling of expenditure which we may expect to have in the current year. The amount of borrowing I should think we shall have to raise this year will be £1,250,000,000. That is a task which the country is capable of performing, always provided that it is satisfied that the war is being efficiently prosecuted up to the very limit


of our capacity. That is a condition of our being able to raise the money. Unless we are spending everything for the successful prosecution of the war the national income will not rise, and we shall fail to give effect to the plan which the Resolution foreshadows. These matters are essential for the prosecution of the war.
I would like to say a word of warning in that connection. While we are discussing finance and the instruments of finance it will be relevant to point out that finance cannot act in a vacuum and that, if the war is to be successfully prosecuted, finance must be not the dictator of policy but the servant of policy. It must be related to the whole economic structure of the country. Therefore, I am a little bit concerned about what is happening in the country at the present time. The right hon. Gentleman told us that the economic efforts of the country remained un-co-ordinated. The country has been extraordinarily patient—properly so— while enduring dislocation in finance and commerce during the early days of the war. Throughout the first month there was little or no criticism. In the second month people said: "The change-over is taking longer than was expected." Now I notice a different tone. I saw an article in the "Times" recently in which it was stated that co-ordination among the Departments—

The Chairman: This is another occasion on which I must ask the hon. Member to reserve his remarks to a future date. They would all be very pleasing and interesting in a general speech on a proper occasion, but they are not matters into which we can go in detail on this Resolution.

Mr. White: I certainly shall not press that matter beyond your Ruling in any way, but I had thought that the conditions in which the money could be raised would be in order. I will leave that aspect of the subject for another occasion. This question of finance and the raising of the loans is a vital link between our war front and the peace front. The two are really indivisible. Our economic and financial problems must be seen as a whole. On another occasion we shall be able to relate the loans which are to be raised as a result of the Bill which will issue from this

Financial Resolution to their application to the necessities of the time. Our supreme task is to avoid inflation, by financing the war from taxation and from loans from actual savings.

5.10 p.m.

Mr. Lewis: The Chancellor of the Exchequer comes to us for very wide powers to raise very large sums of money, but he does not tell us to-day, and he has intimated that he does not propose to tell us when he introduces the Bill which will be founded upon this Financial Resolution, precisely how he proposes to exercise these powers. In other words, he does not propose to tell us anything about the terms on which the loans are to be issued. The reasons he gave for not doing so appeal to all of us; at the same time, this is not an inappropriate moment to hope that when he considers these matters he will take a very broad-minded view of the possibilities open to him. Preparations have already been made for tapping what I may term the ordinary savings available for investment. Restrictions for the purpose of damming up all other possible outlets for savings have been put on forming new companies or of issuing further shares for existing companies. Undoubtedly, when the time comes, the Chancellor of the Exchequer will endeavour to get a very large proportion of the money which, in the ordinary way, would be saved and put into securities of all kinds.
If my right hon. Friend has the courage he might go further than that and tap a further source of supply. People spend their money in all sorts of different ways. Some save a large proportion and invest it, either because of the power which that investment gives or because they want to use the money later for themselves or their children. Many people prefer to spend a large part of the money which they obtain. In particular, many people like to use a considerable part of their money for some gambling purpose. The right hon. Gentleman would do well not to forget that. Suppose he were to issue as an experiment, say, £1,000,000 worth of £1 bonds on some such terms as that no interest should be paid and that the bonds would, in any event, be repayable at par in, say, 20 years. As an inducement to the subscriber 1 per cent., shall we say, every year, of the total issue could be devoted to providing premiums on the


redemption on some of the bonds. The premiums should be provided so that the bonds drawn during those years would be repaid at, say, twice their face value. I would outline one suggestion—

Mr. Boothby: How does that proposal differ from a straightforward issue of lottery bonds?

Mr. Lewis: I am sorry that my hon. Friend has referred to a lottery because I am trying to persuade the Chancellor of the Exchequer to do something which, I am afraid, may go very much against the grain with him. I am asking him to appeal not so much to the man who desires to invest money for the purpose of getting income from it as to the man who wants to gamble.

Mr. Boothby: In a lottery?

Mr. Lewis: Let us consider what could be done if it were desired to float such loans. I see that my right hon. Friend has the assistance of Lord Mottistone, the chairman of the National Savings Committee, to make a movement which was described in the Press as "popularising payment for the war." I do not know how warmly Lord Mottistone might be able to commend an issue of a loan of, say, 2½ per cent., but I am certain that he could commend with immense enthusiasm the issue of a security of which he could say "If you put up your money, in no circumstances can you lose it and you may double it, perhaps even in 12 months." Lord Mottistone is not only chairman of the National Savings Committee; he is also chairman of Wembley Stadium. I mention the fact in order to suggest to the Chancellor of the Exchequer that if he wants to go to someone who knows a little about these things Lord Mottistone would not be a bad person to consult.
I understand that the Chancellor has had an austere upbringing, and I think anything in the nature of gambling would be abhorrent to him personally. But, after all, we have to come in contact with a lot of things which are abhorrent to us, for example, the war. I feel that here is a sort of supply which has not been tapped and which might prove to be very large. After all, large sums are expended every year in all forms of gambling— horse-racing, football pools, etc.—and a

lot of that money could be directed in such a way to the service of the nation on this occasion. The service of the loans would be no expense, because with regard to the people whom I have in mind the fact that the actuarial odds might be somewhat heavy against them does not weigh very greatly, and the people who put up the money could not in any circumstances lose their money. Therefore, you would not be persuading anybody to part with his money. I suggest that some proposal of that kind is worthy of consideration, and I would urge the Chancellor of the Exchequer to discuss it with the chairman of the National Savings Committee.

5.19 p.m.

Mr. Woodburn: It is with some diffidence that I enter into a Debate of this kind, but the very generous way in which the Chancellor treated me the other day gave me encouragement to venture a few more remarks to the Committee. First of all, the whole question proposed in the Bill raises in the public mind the spectre of inflation, and if the Chancellor would be good enough to answer me I would like to ask two questions: What principles are guiding the loans and what precautions are proposed to be taken against these loans causing inflation? We are all very familiar with the process of inflation. It starts by a general increase in prices and that inevitably brings demands for increased wages; the very necessity of paying these wages brings in its turn the demand for more currency and the printing and issuing of more notes, and that brings about such an increase in cash reserves that the Bank starts to issue more credit on the strength of it, and so the inflation grows on what it feeds on.
Inflation destroys the whole confidence of the people in money. It increases the speed of spending. People rush to the shops and make purchases in order to avoid the rise in prices which they anticipate. If I may illustrate that, I remember during the 1923 period of inflation seeing a farce on the French stage. It was a German shop. Sausages were priced at six marks. A woman who was about to buy them said she would not do so because she could get them next door for four marks. While she was out a newspaper was brought in saying that the mark had fallen again, so they took


the ticket for 6 marks down and put up another ticket with 12 marks. The woman having been to the other shop returned and, finding that there was a ticket now with 12 marks, again went back to the other shop where the same process was at work, only to return once more and find that the price had gone up to 24 marks. We know to-day that the Germans fear inflation, which they have experienced, more than they fear invasion which they have not experienced. In 1914 the mark was equal to 1s. By the end of 1923, one shilling was equal to 1,125,000,000,000 marks. Therefore, it will be understood that when that situation arises the whole value of money disappears altogether.
In this Bill the danger arises from the fact that our borrowing for public enterprise will inevitably stimulate borrowing for private enterprise. When the Chancellor issues his loans and spends the public money for the prosecution of the war that will inevitably bring a kind of prosperity to industry. However, while the Chancellor of the Exchequer may control the public borrowing, it is much more difficult to control the private borrowing which may bring about that inflationary position. I, therefore, suggest that borrowing by public loans should be limited to borrowing from existing spending power, and should not be a second-hand method of creating bank credit. For instance, the Chancellor of the Exchequer will be borrowing directly from the banks, which is all to the good, but if we issue a public loan, as my right hon. Friend from our bench said, there is the danger that instead of people lending their actual money to the Government they merely will go to the bank and borrow credit from the bank which they will then lend to the Government.
In the last war I understand banks sent circulars to their customers offering them a loan at 3 per cent. which they could then lend to the Government at 4 per cent. That is, the Government paid then 4 per cent. of which they paid 3 per cent. to the banks, simply for the manufacture of credit which was nothing more nor less than bookkeeping entries in the banks' books. At the end of the last war this process had gone to such an extent that certain people were richer in this country by £5,065,000,000; I think it will be agreed that after the last war the country

was bound to be poorer and yet these people were richer by that amount. It is interesting to see some of the details: 150,000 people were over £5,000 richer, 120,000 people were over £10,000 richer, 40,000 people were over £25,000 richer, 20,000 people were about £50,000 richer, 10,000 people £100,000 richer, 3,000 people £200,000 richer, 500 people £400,000 richer, and 200 people £500,000 richer, while 300 people were over £1,000,000 each richer at the end of the last war.

Mr. Loftus: Those figures are most interesting, especially those of the great multitude who were £5,000,000,000 richer. Could the hon. Member give the date, because the actual purchasing power at the end of the war was 9s. compared with 20s. pre-war? It makes a difference.

Mr. Woodburn: I am coming to that. The figures I have given have come from Cmd. 594, from the Board of Inland Revenue.

Mr. Loftus: What was the date?

Mr. Woodburn: Immediately after the last war. The question which the hon. Member raises is a very important one because the remedy for this was just about as painful as the process of causing this inflation, since in 1921 the Government had to start to deflate its currency, and by April, 1922, there had been repayment of £400,000,000 of Treasury Bills as a result of nearly £400,000,000 Treasury bonds sold. This brought about a terrific crisis in this country from which we had not recovered when the war started. The miners were locked out and every industry in this country was driven into poverty. The savings of the whole working class were dissipated in months of idleness because of this attack on the workers.

Mr. Loftus: The export trade also suffered.

Mr. Woodburn: Yes, and the export trade was affected as well. Everyone agrees that we want to avoid this, if possible. The point which the hon. Member raises is important because by this deflation of the currency these people who were richer by £5,065,000,000 had that money almost doubled and it became worth nearly £10,000,000,000, whereas great firms in the country which had large stocks of iron valued at £14 per ten


found they were now re-valued at £7 a ton. The value was cut in half, and these firms for many years had to adjust their books in order to recover their solvency. I, therefore, suggest we must consider carefully whether these proposals are going to lead us into very uneasy patches of inflation, and whether we are going to pay, as was the case after the last war, a huge interest on what is, after all, imaginary money and a wholly inflated debt. I appreciate the Government's efforts to stop the general rise of prices which would accelerate this process. The Prices of Goods Bill will probably be useful, but I would suggest that that Bill should be applied immediately to war purposes.

The Chairman: The hon. Gentleman must not pursue that subject now.

Mr. Woodburn: In any case, I think the Government should take steps to try and reduce the amount of money which they are going to spend by these methods. The creation of credit in itself is not inflationary. If I may quote from the Minutes of the Macmillan Committee:
The control of money is the power to employ labour. The creation of credit or loans by banks is the creation of power to employ labour. It follows, therefore, that the only limit to the creation of credit is the amount and quality of unemployed labour.
Once the unemployed labour of the country is exhausted, then the only other means of obtaining labour is to transfer it from some other place where it is already being employed. If I may presume to make some constructive suggestions to the Government, they would be these: That the Government should control all the creation of credit or loans by the banks during the war; and that these loans should be permitted only for, first, Government purposes, second, productive purposes, and, third, legitimate private purposes; that the Government should borrow all credit direct from the bank, and not allow the borrowing of credit from the bank by private individuals for those individuals to re-lend it to the Government; and that there should be a voluntary restriction on private spending, by borrowing the existing spending power from the public by the issue of a public loan—but I would emphasise what my right hon. Friend has said, that it would be deplorable if that issue was made at such a rate of interest as to suggest that

anyone was making money out of the war. It seems to me that a survey of production ought to be made, in order to see from what activities the desired labour could be transferred. The cost of the war could be reduced by the application of the principles of the Prices of Goods Bill to all war contracts with the abolition of all unnecessary middlemen's profits and other wasteful expenditure.

The Chairman: Again I must warn the hon. Member that he must not go into detail on these matters. References to the principle of such questions are all that can be offered on subjects for legislation of this kind.

Mr. Woodburn: As a matter of principle, I think that the people generally would agree with the Government's using public credit for public purposes. So far as labour is concerned, I think there are great reserves of personnel, of individual skill, as yet untouched. I think there are limits of the use of credit not yet reached which the Government could apply as public spending power for public purposes; but it must be directed and controlled with a public purpose in mind. I hope that the Chancellor will set up—as I am sure he is anxious to do—some committee or advisory board to survey the possibilities of financing this war without inflation, and of carrying through the war without creating those tremendous financial and economic problems which came out of the last war. The people on this side have unhappy memories of the destruction of their organisations and funds through the crises that came out of that war, and the country itself has scarcely survived those crises. This time we should aim at prevention rather than cure. I am sure the Chancellor and the Committee are as anxious as we are, and I venture these suggestions in the hope that some may prove useful.

5.33 p.m.

Mr. Boothby: When the hon. Member for Clackmannan and Eastern (Mr. Woodburn) complains—as he did very much—about the dislocation and the hardships that were incurred by the industries of this country as a whole after the deflation of 1922, I would suggest that that was not only the result of the fact that we had had a serious inflation during the war. We set ourselves after the last war a quite impossible task, which I hope and believe we shall not set ourselves


after this war. We tried to go back to the gold standard at an exchange parity with the dollar which was quite impracticable. We tried to go back to the impossible rate of 4.86, instead of the more reasonable rate of about 4; and in doing so, we inflicted quite unnecessary suffering upon the workers. I do not blame anybody particularly. It was laid down, apparently, after the war by the Cabinet that we ought to go back to gold at the old parity with the dollar; and we struggled on until we did so. The result was disastrous. That was a real mistake, and I do not see why it should be repeated. When the hon. Member points out that we are in danger of inflation at the present time, I would say that, while I am in sympathy with much of his argument, our unemployed labour reserves are far from exhausted. There is a great pool of unemployed labour, and of productive capacity, from which we can still draw.

Mr. Woodburn: I did not say that we were at that stage. I suggested that it would be wise to have a survey of the position before we came to that stage.

Mr. Boothby: I agree about the survey. I imagine that the Chancellor is taking surveys all the time. But, while we ought to avoid anything in the nature of uncontrolled inflation, there are as great disadvantages in deflation. Deflation, if carried on long enough, ultimately spells bankruptcy just as much as inflation does. We want to pursue the happy medium. I honestly feel that, in our almost tempestuous anxiety to avoid any kind of inflation at present, we may inflict on the business community of this country a deflationary process which may hinder us greatly in our attempt to finance this war.
We have already had imposed on us very heavy taxation, almost penal taxation so far as the direct taxpayers are concerned. If we are to achieve the results that my right hon. Friend hopes to achieve, we have to increase the national revenue; to do that we have to increase the national income; and to do that we have to increase the national productivity. We have to get business going. There are great resources in this country still, but we shall not be able to achieve the results which my right hon. Friend, with some justification, expects from his Budget, unless we get the wheels of in-

dustry turning. This is a simple elementary point; but I think it deserves hammering home at the present time, when we hear all this wild talk about inflation. In order to finance this war we have to produce; and there is at the moment great danger of a large section of our producers being hammered out of exist-ance. We ought really to profit by the experience of the last war, and avoid the mistakes of the last war in financing this war.
Perhaps I might venture to suggest three mistakes that we made in the last war—for which my right hon. Friend certainly was not responsible. On the whole, theloans issued were too long-dated, the rates of interest paid on them were definitely too high, and the inflation of prices which was allowed to take place during the war was completely uncontrolled, and, therefore far too steep. What we want to do is to shorten the date of our loans, to lower the rates of interest, and at the same time to control the rate of inflation by the steps which have been indicated by the hon. Member for Clackmannan and Eastern. If we were now to issue a very long-dated loan, carrying a high rate of interest, that would do more than any other single thing to prevent my right hon. Friend from getting the revenue he desires from the taxation which he imposed the other day, because it would seep up all the money in the country which would otherwise be available for putting into productive industry, and so coming back to my right hon. Friend in the form of revenue. It is a point worthy of consideration that we ought not now to draw into the sink of the Exchequer a large proportion of the money which is available for investment, but that we should allow that money to be used for the purpose of expanding production, so that it will ultimately come back as revenue at the rate of taxation that my right hon. Friend has imposed.
He ought very seriously to consider, for the time being—we can none of us look far ahead at present—an issue of Treasury bonds which can be discounted at a moderate rate for cash by the banks. If he does that he will not impair the cash reserves of the banks; and, therefore, he will avoid deflation. There may be a little printing to be done; but if he makes the bond issue discountable for cash, the banks will regard it as a cash reserve;


and, therefore, there will not be the drain on actual currency that might otherwise be anticipated. You may have to do a certain amount of printing—sub rosa,if you like—and you will have to have some form of inflation before you get through this war. What you want is a form of inflation which inflicts the least hardship on the community as a whole, and which is effectvely controlled.

Mr. Woodburn: Would the hon. Gentleman tell us how many guns inflation will produce, compared with non-inflation?

Mr. Boothby: I am not concerned with the number of guns at the moment. I am concerned solely with how we are going to pay for guns. I hope that at a later date my right hon. Friend may be able to issue short-dated loans at 2 per cent., or even less. I think we ought to avoid the mistake, made in the last war, of issuing long-dated loans at comparatively high rates of interest. Just think of the amount of money that we had to tax our people in order to pay interest on that War Loan which was incurred in the last war, before it was converted.

Mr. Ede: It all sounds so easy when the hon. Member talks in these generalities; but, following up the point put by my hon. Friend the Member for Clackmannan and Eastern (Mr. Woodburn), what are the kind of things of which he thinks we ought to produce more? Can the hon. Member get down from these generalities to particulars?

Mr. Boothby: I was talking in generalities because if I get down to particulars I should, as Sir Dennis has frequently reminded the Committee, be quickly called upon to resume my seat. I am referring to productive industry as a whole, without which I honestly do not think we can finance the war. My observations are in effect a plea to the Chancellor of the Exchequer to remember that, if we are to finance this war, he has to get his revenue, and the wheels of industry must turn round. Unless you give people a chance to make some sort of profit, even if you take it away later, you will not get those wheels going. You have to get industry into full activity if we are to finance this war, instead of allowing it to run at something like 60 per cent., as it is at present. Until you get 100 per cent. activity, all this talk about

inflation is quite unnecessary; because you will not get inflation until you get all our unemployed in employment and all our factories in full production. When that time comes we shall be able to devise means to prevent profiteering, and to see that prices do not rise unduly. Without getting industry into full production, I see very little chance of our being able to finance this war. I would beg my hon. Friends on all sides of the Committee to remember this aspect of the problem whenever the haunting spectre of rising prices and rising costs comes before them. Uncontrolled inflation is a danger—I am perfectly ready to grant that fact—but at the same time there is an equally great danger on the other side, and we have got to strike a balance between the two.

5.46 p.m.

Mr. Benson: I always listen with very great interest to the hon. Gentleman the Member for East Aberdeen (Mr. Boothby), but I have seldom remembered a more interesting and less comprehensible speech than that which he has delivered to-day. He used the phrase that he preferred a happy mean between inflation and deflation. What on earth does that mean? The only meaning that it can have is that we must stay where we are. In reply to my hon. Friend the Member for Clackmannan and Eastern (Mr. Wood-burn) the hon. Member said he was not concerned with the production of guns, but only for the payment for guns, and that it is for the payment for guns we must have inflation. He proposes to pay for guns by raising the prices of them, but how the raising of prices for guns will enable us to pay for them is beyond my comprehension. He said that he wished to stimulate the export trade, again by inflation. How does he propose to stimulate the export trade by raising the price of every article we have to export? The hon. Member was extremely interesting, but I must say that he was extremely difficult to follow. He has warned us that we must have inflation. There was almost a ring of triumph in his voice when he said that. He wants inflation. He has wanted inflation ever since I can remember. Frankly I admit there is great danger of inflation but see no reason for rejoicing. The Government are the largest purchasers in the country, and before the war ends will be purchasing something like half the national production. In 1913


the total national income was estimated at £2,300,000,000. The Government purchases in 1916, 1917 and 1918 averaged £2,500,000,000. Inflation will hit the Government and whatever advantages they may get by a rise in prices followed by an increase in profits and increased taxation will be far more than discounted by the very enhanced expenditure that will be involved by a rise in prices.

Mr. Boothby: As the hon. Member has criticised me very much with regard to inflation, may I ask him a simple question? How does he propose to get his production by deflation?

Mr. Benson: I did not say anything about production by deflation, and I agree with the hon. Gentleman when he said that deflation is as much an evil as inflation. We have to maintain as far as possible the existing price level, and if the Government give orders and organise industry there will be no difficulty about getting production. There is no need to raise prices in order to get production. It is only when industry is entirely uncontrolled that you get some form of stimulus by the raising of prices.
If I may get back to the details of the Resolution, there are one or two points with regard to which I should like to question the Chancellor of the Exchequer. He said that they propose to repeal the Defence Loans Act, 1937. Does that mean also that his rather fantastic sinking fund proposals will be repealed with that Act, and that we shall get rid of the Sinking Fund? I see in the Resolution paragraph 3 (iv) the Government propose to include more sinking fund proposals in the Bill that is to be based upon this Resolution. Sinking fund proposals, if they relate to a specific issue, and are in the nature of a contract with the lender for the purpose of maintaining the level of the issue, are justifiable, but if they are proposals like those in the Defence Loans Act, 1937, to tie the House and future Houses, if they are like the old fashioned sinking funds, they are merely window-dressing. I hope that he is not going to slip into his Bill window-dressing proposals which really have no financial validity.
With regard to paragraph (2), the right hon. Gentleman the Chancellor of the Exchequer referred to the possible need

for conversions. That is rather obscure. I always feel that, with regard to the present Government, obscurity tends to cover a multitude of sins. What form of conversion does the right hon. Gentleman anticipate? Is there any idea at the back of his mind to issue a loan with conditions attached that it may be converted into a subsequent loan, if such subsequent loan is issued subject to better conditions? That is an extremely evil thing, for it paves the way for an increasing rate of interest. Anything that suggests that this House is prepared to pay higher rates of interest on loans as the war goes on would, I think, be disastrous. There is a good deal of psychology in the matter of issuing loans and they can be got more cheaply if the feeling of the country is that the Chancellor's first terms are his last and that there is no possibility of better terms later on.

Mr. Radford: Is not the hon. Member in favour of such an option to convert into any subsequent loan, which would ensure that subscribers would, at any rate, be in as favourable a position as those who hung back from the first loan?

Mr. Benson: The hon. Gentleman completely misunderstood me. I said that any proposal of that kind would prepare the way for better terms later on, and suggested that there was going to be a steady increase in the rate of interest. At the beginning of the war there was a feeling in the country that the Government would borrow at 5 per cent. The feeling in this House during the Finance Debates was very definite, and it was stated that 3 per cent., or thereabouts, was our aim. What has been the effect? That point of view has spread in the country. The recovery of the gilt-edged market has been due partly to the very strongly-expressed statements in the House of Commons that 3½per cent. should be the maximum. It would be disastrous if the Chancellor of the Exchequer under cover of paragraph (2) of the Resolution gave any hint that he contemplated the possibility of better terms for subsequent loans.
I feel on the general question of borrowing very much like an "innocent abroad." I understand that the net saving of the country in the normal prewar period was about £400,000,000 a year. That is all that we can borrow if the borrowing is to be legitimate. Any


increased borrowing must be out of increased production, otherwise it will be inflationary borrowing. In spite of the view of the hon. Gentleman the Member for East Aberdeen I do not think the House wants that. The one thing that puzzles me is this. If the money is there to be borrowed and if it is being steadily produced by increased production, why have we to borrow it? Why cannot we get it by taxation? I realise that at the beginning of the war you could not take capitalised savings by taxation, but we shall very rapidly exhaust any savings that have already been made. Why should the increased production which must inevitably come from heavy Government orders be allowed to flow into savings instead of being skimmed by taxation? Everything that the Government buy must be produced now concurrently. If it is produced concurrently, I do not see why we cannot short-circuit the borrowing process and somehow or other get the money by taxation. It would be difficult, I admit, but, if the money is there, why cannot it be raised in one way instead of the other? Is the Chancellor of the Exchequer to go on the old lines adopted in the last war of piling up debt which sooner or later is bound to be liquidated? If the money is there, let us get it by the direct method of taxation.

5.59 p.m.

Mr. Stephen: The Chancellor of the Exchequer seemed to be very uneasy when he was at that Box introducing this Resolution. He sought to make clear to us exactly what he had in view, and since he sat down he has received a lot of advice as to how he should operate. He has been told that there ought to be a certain amount of inflation, and also that it is hoped that there will not be any inflation, and I am quite sure that if he were to take all the advice that has been given to him he would be in a very unfortunate position. When the Budget was before us there were many Members with gloomy faces because of the increased taxation, and I suggested to them that perhaps they were unnecessarily gloomy. I remember that the finance of the last war was such that at the end of it the people in possession of the land and industry of this country were in possession of more production plant and a greater industrial capacity than when the war started.

In addition to having greater production in their land and greater production in their industrial concerns, the State also owed them £8,000,000,000. Therefore, I could not see how the people in control of the land and industry of this country need be in the least gloomy. As I listened to the Chancellor of the Exchequer to-day I realised more and more how much joy there must be in two sections of the community when war comes along—the munition makers and the moneylenders. Those vultures, in the present state of society, certainly must have a great deal of joy, especially the people who own the productive plant for the making of munitions. Those two sets of people seem to be the only people who can be happy in the circumstances in which we find ourselves to-day.
When I look at the Resolution, it appears to me perfectly obvious that the Chancellor of the Exchequer is following the system which was followed during the last war. He indicated that that was the general line that he was pursuing. Hon. Members suggest that he must see to it not to repeat the mistakes of the last war in connection with the financing of this war, but it is evident that he is going to take the same line, and that if mistakes were made in financing the last war they are going to be made in financing the present conflict. I have a certain amount of sympathy for the Chancellor of the Exchequer when he is told to see to it that there shall be no inflation in connection with these loans, and when he is also told that he must have regard to our export trade, and that a certain amount of inflation will be necessary. I feel a great deal of sympathy with him when he is torn between those two opinions.
The hon. Member for East Aberdeen (Mr. Boothby) suggested that the Chancellor of the Exchequer should pursue a happy medium. So much of the advice that has been given to the right hon. Gentleman consists of a lot of worthless platitudes, and the advice of the hon. Member for East Aberdeen about trying to find a happy mean between inflation and deflation was so much nonsense. The Chancellor of the Exchequer is a creature of circumstances in the system in which he is operating, and in these circumstances, unless he is prepared to take a definite line and to overthrow the ordinary structure of economic society, it will be


necessary for him to pursue a policy which will lead to inflation. Many of the loans that will have to be floated will necessarily, in the present financial structure, lead to inflation. There is no way out of it. Credit will be created as a result of these loans, and if the Chancellor of the Exchequer acts within the ordinary financial structure, maintaining that financial structure, he will have to reconcile himself to a certain amount of inflation in connection with the loans.
The method in the Resolution is all wrong. We had in connection with the provision of the gun-fodder for the war to depart from the ordinary voluntary structure in our society. We had to introduce the revolutionary system of taking the men, whether they wanted to go or not. We had to conscript human lives for the war, and I think the Chancellor of the Exchequer will meet with tremendous difficulties unless he is prepared to adopt the same principle in regard to the financing of the war as was taken with regard to finding the manhood for the war. Unless he is prepared to conscript the wealth of the country, take all that is necessary of the financial resources of the country and put each individual under the same system as the men who have been taken into the Forces, he will be faced with all the mistakes that were made in financing the last war, which led to ultimate confusion and chaos. On this occasion, if the war goes on for anything like the same length of time as the last, far greater confusion and chaos will occur than occurred on the last occasion.
In the Debate on the Budget I asked where the £1,000,000,000 was to come from that was to be got by loans? More than £1,000,000,000 is now contemplated. That money has to be created. How are those millions to be created? Why should the Chancellor of the Exchequer allow this credit to be created by private individuals? Getting behind all the make-belief of the financial machine, in connection with which all the resources have to be found, and getting behind these loans, there is this public credit, and the Chancellor of the Exchequer will make a tremendous mistake in allowing the banks and private individuals in this country to be left in a position to create this credit, which is ultimately really social credit.

Mr. MacLaren: Hear, hear.

Mr. Stephen: I hear my hon. Friend applauding what I say in that respect. When I look at the Resolution I think of the record of the Chancellor of the Exchequer. I think of the first political ideas that I ever heard him promulgate in public. On that occasion he was a new Minister in a Liberal Government, and he came to Glasgow to speak in support of a candidate for the Lord Rectorship of Glasgow University. At that time his way of finding money was not by loans such as are now proposed but by the taxation of land values, about which he was very eloquent. Those ideas which he promulgated with such fine enthusiasm in those days seem to have gone by the board, but I would suggest to him that in the desperate circumstances in which he finds himself he might have returned to the love of his earlier political days and might have found something along those lines that would help him. I would also refer him to the theories of Major Douglas and the Social Credit school. I am confident that they have a good deal to teach him to which it would be worth his while to pay attention in regard to the creation of credit, as social credit.
In this Resolution the right hon. Gentleman finds himself in a difficult situation. There are certain financial exploiters of the nation who are prepared to take the opportunity that a war gives them in appropriating a tremendous amount of social credit by making loans, for which they are not able to provide anything really but book-keeping entries. I feel utter dismay at the way in which the Chancellor of the Exchequer is going on in the rotten old path of capitalistic finance and the exploitation of the people. I am completely opposed to this Resolution, and fundamentally opposed to the whole policy of the Government. I am not in the least impressed by the pseudo-wise remarks that have been addressed to the Chancellor of the Exchequer, telling him not to pursue too much an inflationary policy and to be careful not to go too far along the line of deflation. It is all a lot of humbug and nonsense. The right hon. Gentleman will have to go along those lines according to the rules implicit in the present system, but I would ask him to take his courage in his hands, to throw overboard the rotten financial


system of exploitation, to adopt the principle of the conscription of wealth, and to put the financiers of the country in the same position as the young fellows who have been compelled to give their bodies in this great conflict into which the country has entered.

6.14 p.m.

Mr. Tinker: The Chancellor of the Exchequer said that his statement might be tedious and lacking in interest, but I found it very interesting, and it would have been more so if the Chairman could have allowed the scope of the Debate to be enlarged. On important occasions like this hon. Members have particular points of view in regard to the way in which the finance of the country ought to be run. There are the questions of inflation, deflation, conscription of wealth, taxation here and taxation there, and everybody has a different point of view to put. This afternoon we have to deal with the question of raising loans. We all remember that when the Chancellor of the Exchequer brought in his last financial statement he said a proportion of the money would have to be raised by loan. Recognising that fact, the House of Commons has to try to-day to visualise in what way the Chancellor of the Exchequer will get his money and what will be the rate of interest. The big financial interests will be called upon to find a lot of the money. They are always waiting for that. It is a question of how to invest their money to the best advantage with little regard to the national interest. In finance there is no soul or conscience, it is just a question of the rate of interest.
The Chancellor of the Exchequer mentioned the small investor, and I want to put one or two points to him in regard to the small investor. I hope that he will put the rate of interest so low that no one will be able to make a good fortune out of the war. The last war left us in a sorry plight. In the nation's distress huge fortunes were made, and we are now trying to pay off the great burden of debt which was then created. I hope that the rate of interest will be as low as it possibly can be. In the Post Office Savings Bank the rate of interest is 2½per cent., and it is a very safe investment. Is there any reason why the Chancellor of the Exchequer should not start on a basis of 2½per cent., and no higher? That is my first point. My

second point is that there will be no difference in the rate of interest to the big investor and the small investor. I hope they will get the same rate of interest, and that if there is what is called a short-term policy in connection with this matter it will not receive a better rate of interest than the small investor receives. At all events, I hope the rate of interest will not be more than 2½per cent.
The hon. Member for Camlachie (Mr. Stephen) brought forward a plea for the conscription of wealth. I only wish the Chancellor of the Exchequer could do that. I know it is difficult to get the country to take that point of view, but when human life is conscripted I hope that the question of the conscription of wealth will be examined. What is the total national wealth? I think we should be able to find out. If the Chancellor of the Exchequer goes in for a 2½ per cent. rate and finds that he cannot get the money, he can come to this House and say that he has offered a fair rate of interest and cannot get the money, and then I suggest that he should ask for powers to take over all the wealth of the country. If the people of this country will not lend their money at a reasonable rate of interest, it will be a splendid opportunity for the Chancellor of the Exchequer to conscript wealth in order to carry on the war.
This question of borrowing money means a tremendous burden for the future. The hon. Member for East Birkenhead (Mr. White) mentioned a sum of £1,250,000,000. I do not know how he arrived at that figure, but I take it; and 1 per cent. on that amount means £12,500,000 and 2 per cent. £25,000,000. By adding 1 per cent. you put upon the taxpayer an additional burden of £12,500,000, and it is not fair that this tremendous burden should be put on the backs of poor people, because it has to be repaid. There is one thing which I admire about this country; we do try to honour our debts and pay them. [Interruption.]I am speaking nationally, not internationally, although even in that case we were not getting paid by other people. But speaking nationally, we always try to honour our debts. If 1 per cent. means £12,500,000, think what it will mean if the Chancellor of the Exchequer goes to 3 or 4 per cent.,


or even to 6 per cent. It will mean an enormous burden on the people of this country, which will have to be paid sooner or later by extra taxation.
I put forward these points in the hope that the Chancellor of the Exchequer will try to see the point of view of an ordinary back bencher who is always troubled when listening to speeches on high finance, which he can never properly understand. I am putting the ordinary man's point of view, that we should keep down the rate of interest, and that if the Chancellor of the Exchequer does not get a sufficient response he should conscript wealth for the successful prosecution of the war.

6.23 p.m.

Mr. Kirkwood: In taking part in a Debate on finance I have to be very careful, because I have got into serious trouble before in the House and also in my own party. I can remember the last war and how the financial system of Great Britain collapsed like a pack of cards. The great financiers were left standing, and the wonderful brains of this country found wanting. There was only one thing which was not found wanting and that was the British working class, who saved the situation. A moratorium was declared at that time, and something was introduced which I suggest to the present Chancellor of the Exchequer should be introduced now. I remember suggesting to a Labour Chancellor of the Exchequer, Mr. Philip Snowden as he was then, that there was only one place where he could get money and that was where it was; and that he ought to go there for it. I suggested that he should issue Bradburys. We got Bradburys instead of Treasury notes, instead of Bank of England notes, and they served their purpose just as well. That is the way out here if the Chancellor of the Exchequer cares to take it. The hon. Member for Bridgeton (Mr. Maxton) suggested at the time that they should start their printing machines and work them day and night if necessary running out Bradburys. I suggested that they might call them Snowdens, or any name that they liked, because whatever you call them they have the same backing, and that is the backing of the British working class.
It is quite unnecessary to pay 2½per cent. or any per cent. at all. When we

were fighting tooth and nail on behalf of working engineers to get an increase in their wages, it was with the greatest trouble that we managed to win a paltry 2S. a week increase, and only is. at a time. What did the Bank of England do when they wanted an increase? Did they negotiate? No; they intimated that they were going to have an increase and the Government had to give it, in spite of all that the Labour party could do to get the Government to stand against the demand. Why should we go on paying this? It is pure robbery, and robbery that is unnecessary. I can forgive former Governments who had not the experience and forgive common humanity in the country who had not any experience, but this country has gone through war before, a war which I opposed, just as I oppose all wars, and we were left with £8,000,000,000 of debt. The working classes of this country have to pay the interest on that amount to individuals who have never turned out a shell, who were never in the trenches, and who never lost a night's sleep; and here we are going to do it again. But not if I can help it. I will do all that one man can to draw the attention of the country to the fact that the Government are not worthy of the support they are getting from these benches or from any benches. The Government are simply going on with their old tweedledum-tweedledee business. It is a standing disgrace that they should be allowed simply to do what they like, robbing the working class—

Mr. Radford: Why does the hon. Member go on referring to the loads placed on the working class? The load makes itself visible when the Budget comes, and then all classes, and not only the working class, have to pay.

Mr. Kirkwood: There is an old saying that if one goes on repeating something, people will believe it, but the working classes in this country are so intelligent that they will not believe that, repeat it as often as you like. What they know is that all the wealth in this country is produced by labour, and whoever enjoys it without working is stealing the bread of the workers. We are all living on the backs of the producers. The individuals who are going to get many of these millions produce absolutely nothing. I opposed to the best of my ability the conscription of the youth of this country, but


that Measure was carried. Why do not the Government conscript the wealth of the country? No party has a right to agree to the conscription of human life unless as a quid pro quothe wealth of the country is conscripted. If there were that quid pro quo,it would be worth our while considering the business, just as I have a price for silence in this House, and that price is a Socialist republic. All these things are possible to the House. What is the use of our talking about our democratic Government and our democratic country when day after day we have to draw attention to the fact that we on these benches are getting nothing from the Government? This afternoon we had an exhibition of questions being put across the House, and we requested—

The Deputy Chairman (Colonel Clifton Brown): I do not see the connection between questions across the Floor of the House and the Money Resolution that is now being discussed.

Mr. Kirk wood: Discussion has got to be across the Floor of the House, and with all due respect to you, Colonel Clifton Brown, it is across the Floor of the House that I am speaking. The point I was making was that there are certain questions which it is not considered proper or right for us, even in the Opposition, to put. We are trammelled. The representatives of the people of this country, who have been crushed and robbed—for I consider it an act of robbery to pay to men so much per cent, for the loan of money—

Mr. Marcus Samuel: Mr. Marcus Samuel rose—

Mr. Kirkwood: I will not give way to the hon. Member. The Government have conscripted the youth of my native land. Do hon. Members think I am going to stand idly by and see the youth of Scotland sacrificed in defence of wealthy men, in defence of a financial system which will not permit of old-aged pensioners getting more than 10s. a week? No, Sir. We on these Benches were sent here to fight the ruling classes of this country because the working classes believe that they are being dealt with unjustly. It is because of that injustice down the ages that we were sent here in 1922, and my constituents have sent me here ever since with even greater majorities. The discontent is there. There is discontent with the

conditions that prevail. I ask the Chancellor seriously to consider the issue of Bradburys, that cost us nothing but the printing and the paper. Why should we not have them? Why should we borrow money from individuals who have nothing to back it but us? It was the economic resources of the British Empire that defeated the Germans in the last war. It was not that the British soldiers were any braver than the Germans; it was our great economic resources. To-day, those resources are greater than ever before. Never were there such resources in the history of the world as there are to-day at the command of the British Government. Therefore, it is quite unnecessary for the Chancellor to go outside the powers of the Government.
We hear a great deal about the Income Tax of 7s. 6d. in the £.It has been said that if a Labour Chancellor had introduced such a Budget as the right hon. Gentleman has introduced, there would be a hue and cry against the Labour party. I believe that to be true, but although it is true, I will give the Government credit for what they have accomplished. Yet that does not satisfy the workers. The workers are discussing this question as never before. It must be remembered that it was a tremendous leap which this country took when it conscripted the youth of the country, and that has altered the whole face of argument. Individuals who formerly took practically no interest in politics, and whose great idea was simply to get on, have been hit in a manner in which they have never been hit before. They have been struck down to an equality, and they are asking why they should be put down in this fashion, why they should be treated as helots while the big financiers are still in the unique position of saying what will be and what will not be as far as financing the war or anything else is concerned.
The Chancellor has a great opportunity staring him in the face. Time and time again I have said that I never challenge the ability of statesmen, but I challenge their courage, and it is the courage of the present Chancellor that I challenge. I challenge him to stand out against the powers that be, which are practically all-powerful in this country at the present time. Let the workers realise their power. The workers have been conscripted, and all the onus of the defence


of this country is put on them. They have to give up their lives; they have to give up their jobs at £3 or £4 a week and get a paltry 1s. a day. It is too funny for words. Many of them have made that terrible sacrifice, against all my advice, and done it gladly. But beware of the day when the workers meet you in battle array, as they will unless you are prepared to placate the situation. No consideration is being given for the tremendous sacrifices that the working class has made. It is the working class you have to depend on. The British working class is the finest raw material in the world. I ask the Chancellor seriously to consider the suggestion I nave made; I ask him to start the printing machines, and to run off "John Simons" to finance the war and everything else.

Mr. M. Samuel: Can the hon. Gentleman tell me why, in the workers' republic, they are paying 6 per cent. interest?

Mr. Kirkwood: I suppose the hon. Member is referring to Russia. I have absolutely nothing to do with Russia. I take no instructions from either Moscow or Rome.
To all the world I give my hand,
My heart I give my native land.

6.45 p.m.

Mr. Sloan: The Chancellor of the Exchequer is in the position to-night of one who has to make grave decisions upon which will depend the happiness of the great mass of the people of this country. It must be apparent even to the most innocent tyro in finance that the orthodox methods of finance will not do on this occasion and that a tremendous change will have to be made in order to finance this war. We entered the last war with an Income Tax of 1s. 4d. in the pound and a National Debt of about £600,000,000. We are entering this war with an Income Tax of 7s. 6d. in the pound and a National Debt of £6,000,000,000 or £7,000,000,000. That comparison makes it evident that, in some directions, very serious changes will have to be made in our future finances whether in war or in peace. A very important consideration to my mind in connection with this question is that the rates of interest which are to be paid on the loans now to be raised will condition the rates of interest at which local authorities will

be able to finance their business. High rates of interest will destroy the social services of this country. If the policy which was pursued in 1914 is adopted, it will damage those social services beyond repair and the present generation will never be able to recover that loss.
If we have done any good at all in this country during the intervening period between the two wars, that of 1914–18 and the present war, it has been the little progress which we have achieved in our social services. We have made that progress largely because of the fact that local authorities have been able to borrow cheap money. It will be remembered that in 1919, after the last war, when local authorities began to build houses, building materials were so expensive and the price of money was so high that serious difficulties were encountered. My county council paid 6 per cent. to finance its first housing scheme. If we take the cost of a house at £500, these high charges meant about £15 a year difference in the rentals which the people had to pay. It seems to me that the unfortunate people of this country are continually in a state of paying for past wars or present wars, or if we have not a war actually on hand, we are making preparations to pay for a future war. If we have the honour to live in the greatest Empire which the world has ever seen, we have also certainly the honour of paying for it.
As I say, when the last war began in 1914 the National Debt stood at £600,000,000. That largely represented debt remaining from the borrowings during the period of the Napoleonic Wars. Having paid £3,000,000,000 or £4,000,000,000 in interest, we still had the bulk of those borrowings to pay when we entered on a new war. When I pass Trafalgar Square and see the statute of Napoleon—[HON. MEMBERS: "Nelson."] I am glad to have brought a smile to the countenance of the Financial Secretary to the Treasury. One thing that has always attracted me since coming here has been the smile of the right hon. and gallant Gentleman. His more sinister aspects I have not yet seen. But, as I say, I sometimes wonder whether the slogan should not be "England expects every man to pay his duty for the next 100 years." If we could have a League of Nations which would ensure that no further wars could be fought on the instalment system—

The Deputy-Chairman: I am afraid we cannot discuss general policy or the League of Nations on this occasion. We are now dealing with a Money Resolution and the Debate must be confined to matters concerning the money to be raised and how it should be raised.

Mr. Sloan: I was only about to remark that if we had a League of Nations which ensured that no more wars would be fought on the instalment system, we would have no more wars. If war had to be paid for on a cash basis, it would speedily come to an end. America has set us an example by saying "We will supply you with armaments, provided you bring the cash and carry them away." If the Chancellor of the Exchequer could now decide, as regards this war to raise the money, month by month and year by year, it would take us out of many of our difficulties. It would be interesting if the right hon. Gentleman could give us a summary showing how our national income is expended and the proportion of it which is spent on the luxury of war. I am credibly informed that about three-quarters of the national income is being paid at present for wars of one kind or another.

The Deputy-Chairman: I am afraid that argument is too far away from the Resolution before the Committee. We are now discussing ways and means of raising the loans dealt with in the Resolution, and not expenditure on past or future wars.

Mr. Sloan: I think it is the duty of the Chancellor of the Exchequer in framing these loans to see that there is no profiteering in money. These loans should be, as nearly as possible, interest-free. That is the theme which ran through the whole of the address of my hon. Friend the Member for Dumbarton Burghs (Mr. Kirkwood), but his analogy when he referred to the Bradburys was not quite complete. We manufactured Bradburys but instead of using them, as he suggested, to pay for commodities we handed them over to the banks and then had to borrow them back at high rates of interest. If the Chancellor of the Exchequer, however, will take the tip which has been given to him by my hon. Friend, it will remove many of the difficulties with which we are faced.
We have to-day called to the Colours thousands of our young men, and the number may be millions before we have finished. Those young men have given their all. Their bodies have been conscripted. They have been or are being taken from their homes and from employments where they were earning wages, and they are now faced with the prospect of earning nothing for the duration of the war. Surely, it would not be too much to ask that the same principle should apply to the financing of the war and that the wealth required should be conscripted. I do not believe that that could not be done. I do not believe that it would be impossible to find sufficient wealth in the country, without piling up these huge loans to be paid for by posterity. In the floating of these loans another attempt, apparently, is to be made to bring in the working men of this country. The Chancellor of the Exchequer has indicated that appeals will be made to working men to subscribe to loans in the form of war savings certificates or war bonds as was done before. I remember that during the last war my own people, the miners, subscribed by deductions from their weekly pay. I also remember how they had to get rid of those bonds in 1926 when they were locked out. These men were told by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) that they were the greatest people in the world when it was necessary to get an increased production of coal, but in 1926, after having served the country, they were locked out and they had to get rid of the war bonds for which they had so patriotically subscribed.
One would like to impress on the Chancellor of the Exchequer at this juncture that any attempt to float loans bearing high rates of interest will be most unpopular in the country. When the war broke out, gilt-edged stocks came tumbling down and if minimum prices had not been fixed, Heaven knows how far they would have gone down. Now they have stiffened because the people concerned are not quite sure of the reactions of this House in regard to the floating of these loans. The Chancellor of the Exchequer will be wise if he cashes in on this period, and says to the working people that he will not be a party to piling up for posterity huge loans bearing enormous rates of interest.

6.56 p.m.

Mr. John Morgan: I appreciate the gesture from the other side, and I do not intend to detain the Committee very long. I listened with interest to what my hon. Friends on this side had to say about Bradburys, but I could not help feeling that this is a rod with which we hope to break the backs of the people we are dealing with, and that we had better not leave it in the hands of those on the other side. I can imagine that my hon. Friends here would be more satisfied if there were in this country a Government which had already possessed themselves of the railways and the mines and the actual physical means of wealth. Then they might have some index on which to base the issue of Bradburys. But we have only at this moment the instrument of taxation, and there is very little national property on which to base the issue of currency. I am afraid I should not be ready to give the Government of the day the right to print Bradburys indefinitely. In other words, I cannot see that we should contemplate at this time any suggestion of inflation, as we usually understand the term.

Mr. Kirkwood: May I intervene because I was put down at the Labour party conference on this question? The hon. Member thinks that what I suggest would not be a good thing to do at this moment, but is he in favour of conscripting the youth of this country?

Mr. Morgan: I am coming to that. I was making the point that until we actually possessed the physical means of wealth and the property in this country the mere printing of notes would only add to our difficulties. I am sure the fact has not been lost on the Chancellor of the Exchequer that this country has, already, in the initial stages of this war, conscripted human life and that there must be in the forthcoming loans, to be subscribed largely by financial interests in this country, an element of sheer patriotism. There must be some element which represents sacrifice, clearly defined and presented as such to the financial interests. I know that hon. Members will refer to the Income Tax as representing a measure of sacrifice demanded from the wealth-owning classes, but when it comes to loans this country will not stand for the 5 per cent. sort of mind;—though I do not suppose the Chancellor of the

Exchequer intends to put out a loan at 5 per cent.—or anything equivalent to that type of issue. It would have a serious effect in the public mind at this stage.
On the other hand he must take into account that he may have other loans to float later, and he will wish to retain for those operations the confidence of the interests concerned. But I feel that he must provide, in his forthcoming loans, for soome gesture of patriotism on the part of those who are in a position to subscribe and who are not necessarily putting forward the same element of sacrifice as the conscripted life in the Services. There must be some kind of options in his forthcoming issue, whether they take the form of beneficial war contractors taking up loans in lieu of cash payments for their services, or whether they take the form of the surrender of former war loan now at higher rates of interest for the lower rates of interest which I presume the Chancellor will offer.
Some option of that kind should be present in the issue in order to satisfy a patriotic element that, I am prepared to admit, is to be found in the financial classes of this country, although, of course, some will have to proceed on the strictly business line, being corporations handling trust moneys and so on; but the right hon. Gentleman should, in my opinion, provide to meet this general expectation in the minds of vast masses of the people that there should be some equivalent contribution from wealth to that of the conscription of life that has been initially required. It should be there, or there will remain intense dissatisfaction and a further disturbance of a disquiet that is abroad that we have not yet mastered the profiteer, the muddler, and the bureaucrat. That element is there and should be met.
I have heard discussions in the Lobbies among people who feel that one should forestall the desire to get back to football pools and the rest of it by some kind of limited lottery system, such as seems to appeal to the French people. It is an idea that is abroad, and, as far as I know, it has not yet been ventilated here, because many people are afraid that it will offend the susceptibilities of certain types of mind in this country. But the fact has to be faced that there are millions of


people who are ready to subscribe millions a year through such a motive, and that certain vested interests are exploiting this desire, or this instinct, for a let-off. I cannot imagine that the Chancellor of the Exchequer is going to provide for this let-off in the first loan—I suppose he would consider that it would disturb the confidence that might be felt in the financial structure of this country— but other countries adjacent to us and allied with us undoubtedly have practised this financial art to some advantage to themselves.
The right hon. Gentleman the Chancellor of the Exchequer must be aware of two feelings that are abroad. One is that the financial interests have got to make an obvious gesture when it comes to the raising of money to finance the war; they must be given the option to disclose an element of patriotism at this time. The second thing is that, however hon. and right hon. Members opposite may be inclined, I was going to say to snigger, but I will say to express a certain amount of incredulity, there is a determination abroad among masses of the people of this country that they are not going to carry the weight of this war to the extent that they carried the weight of the last war, and that they must see that the burden is carried by those who, in their minds, rightly or wrongly, should carry it. Although the Chancellor may be thinking in terms of a strictly financial operation in the course of the next few weeks or months, he must at the same time issue that loan with a due eye to the sentiments that are running in this country towards those people who operate the financial machine and who seem in the end to operate it most successfully for themselves and in the ultimate vested interest of the concerns with which they are associated. We must provide an . option for the financial interests to give a very clear indication of their patriotism at the present time.

7.5 p.m.

Sir J. Simon: The Debate has gone on, I think, for some three hours or more, and I must say, having listened to the whole of it, that I greatly admire the ingenuity of hon. Members in different parts of the Committee, because I assume that all that they have said was within the rules of Order, and undoubtedly it was not very easy to make any standard

observation which was strictly relevant to this particular Resolution. The Resolution is, of course, one which merely authorises the giving of powers. How those powers will be exercised, whether by the printing of unlimited quantities of pound notes—as to which I would refer the hon. Member who mentioned it to the right hon. Member who sits on the Front Opposition Bench—or whether in other ways, is necessarily a question for the future. I would only say about the anticipation or the advice which has been expressed this afternoon that I have listened carefully to what has been said, and that I realise more than ever the difficulties of my task. I am sure that the observations of hon. Members are well worthy of further consideration; but really, in replying now, I do not feel that I am able to discuss questions about inflation and deflation and a number of other very difficult —at least, I find them difficult—terms which have been used rather freely in this Debate.
The right hon. Member for East Edinburgh (Mr. Pethick-Lawrence) made, if I may say so, a very interesting speech, and I have no doubt that we shall return to the point which he then made, although he was, perhaps, rather unfortunate in his interpretation of its second paragraph, which, as I explained, is designed merely to provide for the possibility of conversion of a Government issue into another Government issue. I do not agree either with the hon. Member for Chesterfield (Mr. Benson), who thought that the presence of this paragraph in the Resolution might even encourage people to think that they should hold back in the hope of better terms in some subsequent issue. I do not think it would have that effect at all.

Mr. Benson: I did not suggest that that paragraph would do that. I do not think people read our powers. I was afraid that there might be some part of the Bill which is to be introduced which would enable that to be done.

Sir J. Simon: I do not understand the hon. Member's explanation but it does not matter. I thought the hon. Gentleman's reference was to this part of the Resolution, and I thought he was expressing the view that it might encourage people to think that if they held back from subscribing to early loans, they


would get better terms later on. That is quite a mistaken inference from the paragraph. It is necessary in order to coyer conversions of any kind, either during the war or after the war; and perhaps it might be borne in mind that conversions do not always benefit the security holder. I seem to remember that there was a conversion in 1932 by which a 5 per cent. loan was, I think, scaled down to a 3½ per cent. loan. Anyhow, the object of that particular part of the Resolution is, we all agree, what I have just stated.
I think that, in explaining the Resolution, I made a statement to the Committee on one point that was not quite accurate, and I would wish to correct myself now in the presence of hon. Members. I made a reference from which it might be understood—indeed, I think I used a word which suggested—that it was proposed to repeal in the Bill the Defence Loans Act. What I ought to have said and what I meant to say was that the Defence Loans Act will be bound to be referred to in the legislation which we are about to introduce for the purpose of substituting the new Act for the Act of 1919. It was the substitution of the new Act for the previous Act which I had intended to illustrate by reference to the Defence Loans Act. It is not that the Defence Loans Act will be repealed. It is operating, as I said, in the present financial year in respect of £502,000,000, but I think it will probably be convenient as regards any balance not to take advantage of the especial procedure of the Defence Loans Act to which the hon. Gentleman referred in critical terms, but rather to let that balance be merged in the general powers which will be placed in the new Bill. We are not repealing the Defence Loans Act. I want to tell the Committee that I made a mistake, that I apologise, and that I hope the position is made plain now.
I do not think I can go through all the matters that have been discussed here to-day. It is natural that hon. Members who have spoken should look forward and speculate on the use that might be made of these powers and indicate warnings—many of them much to the point— as to the sort of way in which those powers should or should not be used. It is equally clear that I cannot say anything about it, because if I uttered a single

phrase, who knows what inferences might not be drawn and what consequences might not ensue? I am herein the unsatisfactory position that for three hours I have been receiving advice, very good advice, no doubt, but I am unable to say to what extent the advice will be followed.

Mr. Kirkwood: Is the right hon. Gentleman going to take some of that advice?

Sir J. Simon: I excused myself from discussing at length whether the war can be paid for by printing an unlimited number of notes. In my earlier remarks I suggested that the hon. Member should apply to his right hon. Friend the Member for East Edinburgh, who is a considerable authority on matters of this sort. He will explain to the hon. Member what would happen to workmen's wages and other things if we adopted that impracticable expedient.
It is true, as one hon. Gentleman said, that in passing this Resolution and introducing the Bill, we are approaching grave and important decisions. It is true that this Measure has an immense amount to do not only with the winning of the war, but with the future when the war is over, and I am not in the least disposed to minimise the seriousness of that or of the responsibility that rests on those who have to decide. It is natural and right that hon. Members should adopt a critical tone and that the Debate should lave taken so much of the character of warning or of objection. But I would ask this of the Committee: When the time comes when we have as a nation to face this effort in connection with the War Loan, let us remember that Britain has great resources and that the appeal we make ought to be as far as possible an appeal that we make altogether. It is an appeal that we ought to make to all kinds and conditions of people. We cannot expect everything in the plan to be precisely what everyone would most prefer, but I would earnestly appeal to hon. Members to do their utmost if it is possible to enable us to make this appeal together. If it is made together, and if we can carry public and Parliamentary opinion with us, and it is felt to be an honest effort, it will be a contribution of incomparable value to the fighting and winning of the war.

Mr. Gallacher: Whatever method is taken for raising the money, will the


Chancellor give consideration to the remarks of the Prime Minister about placing a burden on posterity when we were discussing old age pensions, or is it only when old age pensions are discussed that posterity is to be considered? In raising the money will the Chancellor accept the principle that while there are people who have a surplus of wealth, that surplus will be taken before a loan is raised?

Mr. Little: May I ask the Chancellor to see that, in view of the fact that so much of the old War Loan is held as trustee stock and by others whose means of livelihood largely depends on it, nothing will be done to depreciate its value?

Sir J. Simon: With reference to the questions just put to me, I have already said that it is impossible for me, and it would be wrong for me, to make any declaration at this moment which might, even by accident, be assumed to point in a particular direction. I shall consider carefully everything that has been advanced in the Debate, but it would be utterly wrong for me at this stage to say anything which would qualify the complete freedom with which these powers must be used on behalf of the country.

Question put, and agreed to.

Resolution to be reported To-morrow; Committee to sit again To-morrow.

TRANSPORT POLICY.

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Munro.]

7.18 p.m.

Mr. Ellis Smith: I wish to raise a few questions on the transport policy which is being followed by the Government. There appears to be a dead hand over the question of transport. I raise the matter because of some questions which I have had on the Order Paper. I agreed to postpone one series of three questions, and it was stated that the Government were preparing a statement in answer to them. Although I know that the statement is to be made probably this week, we would be lacking in our duty if we did not raise this question, seeing that we have postponed it for so long and that, in our opinion, the time has arrived when the grievances of the people in regard to transport ought to go on the

records of the House in order that the transport policy can be changed. In addition, I put down questions dealing with the position in North Staffordshire itself. I want also to deal with the situation on the basis of my own experiences and the conversations I have had with others.
We are supported in our plea with regard to transport by the specialists who write in the technical journals, who have been very critical of the Government's policy. I need only remind the Minister of the publication called "Transport," in which a certain statement appeared. I am sorry that I cannot follow my usual practice of quoting the passage itself. What happened was that I read it in the Library but afterwards, when I went to take out the extract, it had gone, and I have not been able to find it since. The leading article said something like this: "When the history of the past two years is written there will be some very severe criticisms of certain people." On behalf of millions of people I desire to protest against the transport muddle which has existed since the beginning of the war and should like to know who has been responsible for it. There was one question which I raised first in this House in 1936, and again in 1937 and in 1938, and several times this year, and last July I was given a promise that certain steps were being taken to deal with it. On Budget day I also raised the question. Despite all the assurances given nothing has been done.
In all large industrial centres there are appalling queues of people waiting for transport. They are people coming home from work, and they are not the sort who have limousines or any cars at all. The trams have been taken off the roads and the people have no other means of transport than the buses, but the bus services have been severely restricted. Many of those waiting are men who work in steel foundries, iron foundries and pottery factories. After working all the day in great heat, they come out perspiring, and then have to stand for 10, 20 or 30 minutes waiting for buses. Owing to the development of large housing schemes outside cities people now have to travel four, five or six miles to their work. Modern industrial life is organised, on the transport side, on bus services, and therefore the question is one of urgency.
That is the background of the case I want to present. I am the first to admit


that we have to make allowances, that we are involved in war and cannot expect to go on as in pre-war times. I am the first to admit the need for petrol rationing. With the increased mechanisation of our armed forces and the large quantities of petrol consumed by the Air Force, it is essential that we should economise petrol in every possible way. But having admitted that, what are the facts? At the Newcastle-under-Lyme Town Council a few days ago the Mayor produced a pile of letters which he said were legitimate complaints from people living in the area, and the local paper in North Staffordshire had a leading article on the subject from which I shall quote extracts in order to show that I am not speaking from my own immediate acquaintance with the problem only but on behalf of large industrial areas. The article, which was headed "Bad Bus Services," said:
Something is to be done about the grossly inadequate bus services of North Staffordshire, but how much and when remains to be seen. When questions were put in Parliament Mr. Bernays announced that substantial improvements in a number of services were to come into operation on the morrow, which was yesterday, but substantial improvements were not in evidence yesterday. A Ministry of Transport official in Birmingham made the rather gratuitous observation yesterday that if the Potteries expect to have the roads flooded with buses they will find they have made a great mistake. The inference of this statement does not seem to parallel with the Minister's announcement of substantial improvements. Nobody wants the roads to be flooded with buses, but there is no justification for the contracted services which are inflicting not only inconvenience but actual hardship upon the people going to and returning from their work.
Then I want to quote from an article written by Mr. Ernest Bevin, the general secretary of the Transport and General Workers Union, which appeared in the "Commercial Motor" of 7th October, 1939. Here are seven quotations which, in my view, adequately sum up the situation with which we are confronted. I began by saying that there was a "dead hand" over the transport policy of this country, and it may be that in this article we get the key to understanding who is responsible for that "dead hand." The article states:
Everyone of us engaged in the general road transport of the country has been gravely concerned at the attitude adopted towards road transport by those in authority. One is driven to the conclusion that there is a tremendous railway influence being brought

to bear upon the position, which instead of allowing the problem to be examined as a transport problem is influencing the course of events to achieve long desired ends, namely, the securing of the monopoly of certain traffics. I regard this as a tragedy for the nation. It was my lot to serve on the committee dealing with the ' Square Deal,' and at no point during those discusssions were we permitted even to discuss a desirable transport system for the country.
The article goes on:
It now appears that one branch of the transport service of the country has been taken over by the State and guaranteed by public funds, while the remainder is subject to a form of petrol rationing. It appears to me that such rationing is being used to accomplish not merely the conserving of petrol but to bring about other transport changes. It is a position which I am sure Parliament would never tolerate had it the whole of the circumstances and facts placed before it.
By getting these observations on record I am attempting to-night to see that Parliament is made aware of the grievances of the people regarding the transport policy. Then the article goes on:
I have also contended very strongly that the present method of petrol rationing, which is resulting in the discharge of a very large number of efficient drivers and forcing them into other industries, may at a critical moment result in an absence of the type of trained men and a ready supply of vehicles which can, when required, immediately be turned on to the job.
It concludes with these words:
If present arrangements be allowed to continue in which road transport has been immobilised"—
not "mobilised"—
on the one hand, and, on the other, tremendous claims are being made on the railway equipment to meet the needs of the Fighting Services, it will be probably found that there is insufficient transport to meet these concentrations.
There we have a very serious indictment written by the responsible general secretary of a trade union who is not accustomed to writing an article of that character unless he has good grounds for so doing. We are very suspicious that what is stated in that article is largely responsible for determining the transport policy of the country.
Here is another example. I was speaking a few days ago to the transport representative of one of the largest firms in this country. As a result of their manufacturing certain apparatus it is essential that delicate parts of it should


receive only one handling. It is therefore necessary to have a huge transport on the roads so that the apparatus may be sent direct from where it is manufactured to where it is being installed or to the nearest seaport. The firm found they had to send those loads to many parts of the country, and that there was no clearing centre to organise that transport in order that the petrol should be consumed to the best advantage of the State. The result is that large vehicles are going to industrial centres of this country and are returning without loads. One would think that, as we have been involved in war for eight weeks, clearing centres would have been organised long before now in order that the road transport system of the country might be used to the best advantage.
I have already admitted that petrol rationing is essential in present circumstances. On this side of the House we have many times raised the question of organising alternative methods of motive power. Why have not the Ministry of Transport and the Ministry of Mines got together before now, as has been done in other countries, in order to deal with this problem? I know that it can be said that this question, within certain limits, is the responsibility of the Ministry of Mines, but transport as a whole is the responsibility of the Ministry of Transport; and therefore one would think that it would be their responsibility to go to the Ministry of Mines and say: "Seeing that we are involved in war it is necessary for us to develop alternative methods of motive power, and we should have a scheme to put into operation right away." Here again, we are very suspicious—and we have good grounds for our suspicion—-that certain vested interests in this country have prevented the development of alternative methods of motive power.
I want to ask the Minister, Who has been responsible for retarding in this country those alternative methods of motive power for transport? We believe that the responsibility lies with well-organised vested interests. If that is so, those people are a menace to the State and to the interests of the people and it is time that we called upon the House of Commons to deal with them. It is well known that there are several alternative supplies of transport motive power. The one about which I know most is producer gas. I have a letter here from the manager

of the Highland Transport Company of Inverness. Because I have put questions in this House time after time, the interest of a number of people has been aroused. This manager states that he had a bus which travelled from Inverness to the North and that its performance was equal to that of petrol buses. He then goes on to say that his statement could be easily vouched for. He wrote me a further letter showing that he had placed an account of his experience before the Ministry of Mines. We are now in November. Here is an experiment which was a huge success in the North of Scotland in very difficult conditions—

Mr. Kirkwood: In Glasgow also.

Mr. Smith: My hon. Friend reminds me that this experiment has also been carried on and worked out in Glasgow. I could give further illustrations, but I am not asking the Minister to accept my word in this matter. I would refer him to specialists in the industry, such as the manager of East Midlands Motor Services and the Chesterfield Corporation. The experience of those bodies and of other transport organisations shows that there are methods of transport which could have been brought in long before now.
Let me give one or two illustrations of what has been done in other countries. In 1935 there were 1,300 vehicles in France running on producer gas; in 1936, 2,485; in 1937, 4,436; and in 1938, 10,000. In Germany, in 1937, there were 1,207; in Italy, 1,500 and, in Russia in 1938, 16,000 lorries and 9,000 tractors so working. In Russia they are working to a programme in respect of next year which includes 40,000 lorries and 15,000 tractors. On the other hand, in July, 1939, in Britain, there were only 30 vehicles run on this alternative method. There is some ground for our suspicion that there is a dead hand' somewhere, and we are convinced that vested interests have prevented the development of this kind of thing. Here we are, the greatest industrial country in the world, always in the forefront in the past in developing matters of this character, having reached a situation in which we are being held back by narrow vested interests. As the general secretary of the Transport Workers' Union said, it is time that Parliament dealt with the matter and with vested interests who are a menace to the State.
Had this alternative method been developed it would have found employment for almost all the unemployed miners in the country. One of our greatest problems in this House has been to deal with distressed or necessitous areas; nearly every distressed area has been based upon a coalfield. The biggest proportion of the miners signing on in those areas could have been employed if only that alternative method of transport had been developed. It has been proved to be a business proposition. I could have understood if it had not been shown to be a business proposition but this has been shown on the Continent. At least 2,500,000 tons of imported oil per year could have been replaced permanently by solid fuel had this method been adopted and our shipping tonnage would now be employed to better advantage than in transporting this oil. Food could be carried instead of oil and it would also help us to finance our imports.
Therefore, I would not only appeal to the Minister to deal with this question of transport which I have raised, but I would say to the Secretary for Mines that when he makes his statement we shall not be content with that statement. The Ministry of Transport should see that the Ministry of Mines is stimulated to great activity in order that the people in this country can have the transport system which they ought to have. There are many military vehicles, such as those drawing heavy artillery, the vehicles of the Royal Army Service Corps and many others, which could easily be converted to these different methods of motive power. Here again it would result in the conserving of the supply of petrol, and the result of that may be that this country would have a big advantage as the war proceeds. I therefore ask the Minister not only to give his attention to the immediate problem of seeing that the industrial workers have a better transport service, but also that as soon as possible these alternative methods should be adopted in order that the transport system of this country can be organised on a better basis than it is at present.

7.42 p.m.

Mr. MacLaren: I wish to thank my hon. Friend the Member for Stoke (Mr. E. Smith) for having opened this Debate. I remember many years ago I discovered at

Stoke-on-Trent a single track tramway. The conductor was clean-shaven at Stoke-on-Trent but usually had a beard before the final destination of the tram. Not infrequently at intersections of the line the conductor used to sit down and read a paper until the other tram appeared on the horizon. I do not think it would be untrue to say that the transport system at Stoke-on-Trent was the worst in Europe. It so impressed me as a native of Glasgow, where we had such an excellent system, that I thought the best thing to do was to improve the system at Stoke-on-Trent. It is a long story, but we got rid of these hen-coops on wheels as soon as possible. I remember that we put on the roads anything we could find with a combustion engine so that we could run in competition with these trams, and finally we worked them off the road entirely.
After we had destroyed the tram system it would be true to say that for the first 1½ years Stoke-on-Trent could boast the most efficient, comfortable and accommodating transport of any city in the country. All went well until there came into this House a Traffic Act when, to sum it all up, the country was divided into districts, and we all remember in this House how we were shocked to find that the country was put under the control of semi-Hitlers. In Germany they have only one Hitler, but in our traffic systems we have had a dozen or more. We gave to these traffic controllers such powers that we could not interfere with them and we had no control over them; they were imperious and their word was law. I remember that we had an agitation in Stoke-on-Trent, because we could see what was going to happen. Whereas we had been independent, we were to be placed under the dictatorship of a gentleman sitting in Birmingham. We called the local authorities together at Birmingham and pointed out what was likely to happen by handing such authority over to men in districts like these, but it was of no avail. It did not require keen sight to notice that there was in this country a competitive form of transport working tooth and nail to get the motor traffic under some form of restriction because it was competing with them. It was not many months after that when a sort of sterility set in on Stoke-on-Trent itself. Then we had to go cap in hand on all


matters appertaining to our traffic in Stoke to Birmingham and the gentleman in Birmingham treated us rather disdainfully as it did not quite suit him to deal with us.
There were many complaints coming in daily. If there is one thing more than another which I object doing in this House, it is dragging problems here if I can settle them quietly behind the doors. These complaints came in and I thought the best thing to do was to write to the chief constable and find out if he could ascertain what was the state of affairs there. He wrote back an assuring letter and said things were not so bad as people suggested. Subsequent to the letter from the chief constable I received more letters. I went to a place called Tunstall at the far end of the Stoke-on-Trent area. If anyone could see the Stoke-on-Trent area on the map they would see that it looks for all the world like the bones in a fish; it is on a ridge. At one end are Longton and Fenton, and at the other end is a place which enjoys the name of Golden-hill; you go through Longton and Fenton right up to it.
For some reason or another, these new authorities decided that the buses should stop at Tunstall instead of going on to Goldenhill. It is at this point that the road becomes very dreary, with large gaps in it that are anything but inspiring, and it is a steady climb right up to Goldenhill. I went to Tunstall and I saw-queues standing for anything from 20 minutes to three quarters of an hour in a shower of rain. Then when a bus appeared there was the usual scramble and the people who had been standing were crushed out and left behind. Altogether it was a diabolical condition. I then ran from Tunstall to Goldenhill and found people walking all that distance in this drenching rain. They told me that the miners and the pottery workers who had to come from Goldenhill down to the other areas in all kinds of inclement weather could not get bus room, so they thought they had better set out and walk. We can visualise what happened when they got to the potteries or in other working activities with their wet clothes. They could not get buses in a place where we used to have one of the finest transport systems in the country. That all started when the Mussolini in Birmingham began to put his finger into the pie and interfered.
I used to read reports of the activities of the Commission who sat there discussing the pros and cons of the local people as regards licences and transport, and regularly there would be raised the question as to the effect of these motor buses on the railway traffic. As I have said, one did not require to have very keen insight to see what was going on. The right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) in his speeches at the time, always made it clear that we must not allow this motor traffic to get away with it in case we did damage to the railways. I do not want to bring in any extraneous matters, but that could be explained in other ways. I understand that since the war began the powers of these local controllers have been subject to the Ministry of Transport. I am glad that that is so, because I have been trying for a long time to get something done from Birmingham, and have received little or no encouragement.
Things have got to such a state in Stoke-on-Trent—I have no doubt that that is why my hon. Friend the Member for Stoke raised this matter—that I am assured by the town clerk and the police authorities that anything is possible in the way of disturbances, because of the frightful competition to get on these buses. I ask that this matter should be immediately taken in hand. I am not merely repeating hearsay; I went there and saw for myself what was happening. I understand the same thing is happening in other large towns, but I only speak of what I have seen myself. I ask that Stoke-on-Trent shall be rid of this trouble. I am glad that new arrangements have been made as a result of the war—it is an ill wind that blows nobody any good. I hope that under the new arrangements the Ministry will put an end to a state of affairs which should never have existed. It is too bad that at a time like this, when people have to turn out to work at all hours—because in Stoke-on-Trent they are working at full pressure in consequence of the war—there should be all these hindrances, which I hope will be removed.

7.53 p.m.

Mr. Muff: I am grateful to my hon. Friend the Member for Stoke (Mr. E. Smith) for raising this matter. I disagree, however, with one of his remarks. He talked about a "dead hand." I would suggest that it is a case rather of a


stranglehold by the very powerful hand of a Department which is either in blinkers or closing its eyes altogether to the situation. In my own constituency we have a man, who is certainly the biggest contractor on our side of the north of England, performing work of national importance. This contractor is so important that even the Minister of Transport has taken away his transport manager in order to make him fuel controller for the East Riding. This contractor has been entrusted with the position, at no remuneration, of chief air-raid warden in the East Riding, and he is required to free himself from the details of his business. The business in which he is engaged at present is the very difficult one of providing air-raid shelters for the large population of my constituency, where, owing to the fact that if you go down six feet you find water, all the shelters have to be above ground. Accordingly, this firm has mobilised all its forces, particularly transport, in order to convey the necessary sand, which is very plentiful within a few miles of my constituency.
The Ministry of Transport were asked for supplies of petrol, and the firm's own former transport manager was also appealed to. The firm have been allowed 650 gallons a week, and when the head of the firm sent in a detailed report showing that he needs nearer 4,000 gallons a week, he was told by the Ministry that they could not entertain his request. He went to another watertight Department, the Ministry of Mines, to see whether anything could be done there, and I have a letter in which the head of this firm is characterised as frivolous, notwithstanding the great position he holds. For that reason, I say that the hon. Gentleman since his advent to his new job has not displayed that vision which he might have done, and that he is trying to put a stranglehold on my part of the country, at any rate. Besides these other duties, this firm have been entrusted by the Government with the responsibility of seeing that tens of thousands of our troops are accommodated in huts before the inclement weather arrives. To do that, the firm have mobilised, not only their, own transport, but, with one exception, all the lorry transport in the East Riding. Again, they have come up against, not a dead hand, but the hand of

someone acting blindly. In addition, they have been gratuitously insulted by the Ministry of Mines, who have said that the head of the firm is frivolous. I tell the hon. Member, in the new position he is occupying, that if there is something that we do not desire in the East Riding —this is not a matter for laughing.

The Parliamentary Secretary to the Ministry of Transport (Mr. Bernays): I was not laughing at all.

Mr. Muff: The Ministry of Health are perfectly aware of the position of Kingston-upon-Hull if anything untoward caused by the war happens. If the hon. Gentleman was not aware of that position when he was at the Ministry of Health, I can tell him that his late chief was fully aware of the fact. I am asking that his Department shall review the position, taking into the picture the: realities of today and the fact that this contracting firm needs additional petrol, so that it can perform its duties expeditiously and efficiently. Therefore, its applications should not be characterised by the Ministry of Mines as frivolous, but the two Departments should attempt together to settle the matter satisfactorily. The hon. Gentleman should, at any rate, show some vision, and when applications are received they should be treated upon their merits.

8.1 p.m.

Mr. James Griffiths: I am sure that those of us who have been present in the House, and many hon. Members who are not present, will be very grateful to my hon. Friend the Member for Stoke (Mr. E. Smith) for raising a very important matter. He asked a question which has led to his raising the matter on the Adjournment, and I too put a question which was directed to the Secretary for Mines, but, since it concerned transport, it was transferred to the Minister of Transport and was replied to by the hon. Member who is to reply, and, I hope clear up the position. As the hon. Member for Stoke said, we all appreciate that, at a time like this in a period of emergency, transport, like almost every other aspect of our life, must be affected, but in transport, as in other things, there has been a tendency to overdo it, and in some ways to over-organise. I think there has been a lack of appreciation of some of the services,


which are very essential, and which I and hon. Members who have spoken believe to have been curtailed far too seriously.
I want to say a few words about two aspects of this problem, the one which has been dealt with very fully by the hon. Member for Stoke and the other which was the subject of the question I put to the Minister. The hon. Member for Stoke has constantly, as have other hon. Members, raised this question of alternative forms of transport in this country. I appreciate that the question of the use of gas, for example, is a subject for the Mines Department, and I am not going to discuss that matter further this evening. I believe that the Ministry for Mines is giving very serious consideration to this question, and there is very keen interest in the country upon it. The omnibus has become a very important form of transport in this country. I too come from a part of the country where the omnibus is a means of transporting workmen to and from their daily occupation and has become of enormous importance. I have seen a very great change in industrial areas, and particularly mining areas. The old practice was for the miner to live as close to the pit as to be able to walk to the pit in the mornings, and the result of living close to the pit is in some degree responsible for the unspeakable ugliness of many of our mining villages. The coming of modern transport and the provision of facilities for the men to bathe and change at the pithead have removed the necessity for living close to the pit. There has been a very welcome spreading out of the men who work in the pit to areas outside.
That is a very desirable tendency. It means that there is an ever increasing number of miners who travel to the pit by omnibus. Omnibuses, generally speaking, are much more convenient than the trains, and I would urge upon the Minister who is to reply that, in the curtailment of the public vehicle services that are now taking place, due regard should be paid to the problem of the necessity of maintaining to the full the omnibus services conveying men to and from their work whether at the pit or any other kind of factory. If these services are curtailed it will have a very serious effect upon industrial production, particularly in the days of the war. What we save in

petrol through the cutting off of the omnibus services will be more than lost in the reduced production because of the curtailment of these services. I therefore urge that fact upon the Minister.
The second point I want to put about the public omnibus services is this: I did not entirely share the view of my hon. Friend the Member for Burslem (Mr. MacLaren) when he spoke about the Birmingham dictator. I gather that he referred to the Traffic Commissioner, but in my own area—and I think I speak for my colleagues—the Traffic Commissioner has done a piece of very good work. Road transport was in a very chaotic condition and regional control was very essential. I do not see how we could possibly get on without it. The Traffic Commissioner in my area has really coordinated all traffic services. What is taking place now is something for which he is not responsible. He is an administrator and has to carry out his duties, and the limitations that are imposed are imposed by the Minister of Transport. We ought not to attack traffic commissioners as they are not responsible for this problem. In that part of the country from which I come, where men spend most of their days in the pit, one of the little amenities making life in the mining villages a little more tolerable is the chance to go to the neighbouring towns on a Saturday afternoon or evening. They come to my town of Llanelly from the neighbouring villages.
It is very desirable, if we are to maintain the morale of the people of this country, to enable those who are working hard in the pits and in the munition factories and elsewhere to enjoy the little amenities that make life more bearable, and this will be more necessary in the days to come than in peace-time. There is little if any reduction in the number of people who travel from the villages to the towns on Saturday evenings. Last Saturday week and the Saturday before I travelled by omnibus from my town to a village four miles away. There were literally scores of people almost fighting for each omnibus. This is very serious in the black-out. I am really frightened at this. People come to the town and do their shopping on Saturday afternoon, and from six or seven o'clock in the evening they go to the omnibus station. There are


many towns in this country without anything that can be called an omnibus station, which is as essential as a train station, where traffic and people can be regulated. The result is that the people congregate for these omnibuses in a public square or a side street, and in my own town in the black-out I have witnessed scenes which have frightened me. I would like the hon. Member to look into that problem. Train facilities have been curtailed and omnibus services are being substituted, and it is essential that some attention should be paid to this problem. It is very desirable, even if the private consumption of petrol has to be kept down, to maintain public omnibus services. In any case, I put it very strongly to the Minister that in the interests of maintaining the morale of the men by allowing them and their wives to enjoy themselves in the towns, in the market or in the cinema, better facilities should be provided, while in the interests of public safety I do urge that steps should be taken to stop this mad rush for 'buses on Saturday and Sunday evenings.
The further matter with which I should like to deal is that of coal rationing, which we have discussed in recent weeks from many standpoints. The miners whom I represent and miners all over the country are amazed at what is happening. They come to me and they say, "This is a funny world, this is a curious situation. Somebody is blundering very badly. Coal is to be rationed and we are asked to produce so many millions of tons more coal and yet the present position is that the pit where we work is idle two or three days a week because of what colliers call stopped wagons." We understand from the Secretary for Mines that an additional 30,000,000 tons of coal per year is required; but what is the use of asking for that if you cannot transport the coal that is now being produced, to say nothing about millions of tons more?
This is a very serious problem. We understand that there have been discussions between the Secretary for Mines, the employers and the workmen's representatives, and that it has been decided, as Government policy, that it is very desirable and essential to increase very substantially our coal output. The increased figure that we have heard is 30,000,000 tons a year. That is a big

job, but we can produce it, and we will do it if we are given the proper opportunity. Perhaps now that the country wants coal so badly there may be a chance for the poor miner over 45 years who has not been able to get much sympathy from anyone in the last few years. The production side can be managed. We can re-open pits and put colliers, who are now idle and who are wasting their lives, to produce the coal; but all that is contingent upon its being possible to transport the coal. It is said that steps are being taken to deal with this problem and that those to whom goods have been conveyed by truck and wagon have been asked to release them as soon as possible. That needs to be done at once. Nominally, since a few days after the war broke out there has been a pooling of wagons, but the impression I have formed is not very encouraging.
Is all this co-ordination merely on paper? Does it exist in practice? Is there any real co-ordination? If so, who is or what is responsible for the fact that at a time when people have been denied coal, when they are being rationed, there are all over the country, in South Wales and in Yorkshire, pits where men are suffering from short time, and the reason given for that is that there are no wagons. It will be useless for the Secretary for Mines to sit down with the representatives of the owners and miners to work out schemes on paper increasing the production of coal, in order to maintain our coal markets, and, what is of supreme importance, to increase our export trade, unless this problem is solved. We have now a splendid opportunity, which I hope we shall seize with both hands, of recovering some of the export markets for coal which we have lost. But all these things are dependent almost entirely upon transport. I hope, therefore, that in regard both to public transport and industrial transport very serious consideration will be given to the present situation, and that there will be a real attempt to co-ordinate the transport of the country and to use it for national purposes and national ends.

8.15 p.m.

Mr. George Griffiths: The hon. Member for Stoke (Mr. E. Smith) has raised this question, and some people might perhaps think that it is only a matter which affects Stoke and Burslem. The hon. Member for


Llanelly (Mr. J. Griffiths) has put the point of view of South Wales and I should like to speak for Yorkshire. Before the Parliamentary Secretary to the Ministry of Transport replies it would be well if he knew some of the conditions now obtaining in South and West Yorkshire. I will put the point of view in regard to coal rationing. The Parliamentary Secretary to the Ministry of Transport will not be able to reply in regard to coal rationing, but I should like to state the view that is taken in my district on this question. My people have said to me: "George, what is the matter down yonder? Are the men mad, or what?" The position they put is that at the pit where I worked previous to coming to the House of Commons they had 2½ shifts and they flushed the other shifts, and the men could not get one penny unemployment pay, because they had worked part of a shift. Two and a-half days pay at 8s. 6d. a day is a very small sum for a married man to take home to his wife and children.
The Secretary for Mines says that an additional 30,000,000 tons of coal is required. On that, my people said to me at two miners' meetings last Sunday—the better the day the better the deed—"What on earth is the matter? We are here, we want to produce coal. We want food for our wives and children, and yet we are flushing." Last Friday afternoon the men refused to work half a shift. They went to the manager and said: "Are we going to work a full shift?" He said, "I cannot tell you." Their reply was: "If we are not going to work a full shift, we will not work." I am sorry to say that they struck for that one day, but the trade union officials on Saturday persuaded them to go back to work on Monday morning. That is a pit which employs 4,000 men. On that Friday afternoon the men did not produce any coal. I wish the Secretary for Mines was present to hear what I have to say. Miners all over the country are amazed that there is any coal rationing.
Now I come to the other question raised by the hon. Member for Stoke, that of the omnibuses. When the pit flushes the men have 40 minutes to wait in their wet clothes for a bus. There are not pithead baths everywhere, although they have started to build them there. These men on a cold October or November day have to wait 40 minutes in their wet

clothes for a bus. Many men are down with influenza and other diseases, because they catch cold waiting for a bus for over 40 minutes on a cold winter's night. The township from which these people come used to have a bus every quarter of an hour; now they get three buses in two hours. The town council and the representatives of the miners have written to the Barnsley Bus Service for more buses, but they have no petrol. They have only sufficient petrol to give three buses in two hours. The transport facilities have been cut down by 50 per cent.
We are asking that the Minister of Transport and the Secretary for Mines should get together. There is still too much sectionalisation in the Government. The Secretary of State for War, the First Lord of the Admiralty and the Secretary of State for Air are looking after their own show. It is the same in every Department of the Government. They do not pool their brains. I suggest that the Secretary for Mines and the Minister of Transport should get together and have these disadvantages eliminated. The Secretary for Mines wants a bigger output of coal, but he will not get it unless transport is provided to get the men to the pits. When I was working in a pit it was a miracle if a man lived four miles away, but to-day men live 10 and 15 miles away from the pit and they get there by bus, not by train. Those men who are living far away from the pit have to get out of bed at half-past four in the morning in order to get there in time, and if they oversleep for a quarter of an hour it means that they lose their bus. In days gone by if they overslept a quarter of an hour they might catch the next bus, but that cannot happen to-day. These are things which are happening in our village, and I hope the Parliamentary Secretary will pay attention to what we are saying and give consideration to these matters.

8.24 p.m.

Mr. A. Jenkins: I am glad that the hon. Member for Stoke (Mr. E. Smith) has raised this matter, as it is of vital importance to many parts of the country at the present time. There is far too much rigidity in operating restrictions on services. In my own division the rule that has been applied is a reduction of 50 per cent, of the buses, although some


concession has been made as far as workmen's services are concerned. They have tried to maintain the working services at neighbouring collieries fairly well, but the fact is that the intention to cut down the services by 50 per cent. and still maintain the workmen's services has had the result in my district of reducing the public services to 37 per cent. of their original basis. The effect of that, as the hon. Member for Llanelly (Mr. J. Griffiths) has said, is that there is a struggle to get on to the buses and that owing to the great spacing between them people are left a considerable distance from their home. That is a most unsatisfactory state of affairs. I want to reinforce what the hon. Member for Llanelly has said regarding the Traffic Commissioner for South Wales. He has done his best. I have spoken to him on a number of occasions on this matter and the impression I gather is that he has done all that lies in his power to meet the situation.
I should like to point out how those who are responsible have disregarded local circumstances. My own division is a reception area into which 3,000 or 4,000 additional people have been brought in. We have also a substantial ordnance factory being built within four miles and at the moment 6,000 people are employed. All this tends to create more and more congestion. There has not been sufficient regard for local circumstances, and I hope the Minister of Transport will deal with this matter in a much better way than it has been dealt with so far. I have lately been in communication with the Minister of Transport on this question and have tried to find some solution of the problems which confront us in our area. I have suggested that bus and railway tickets should be made inter-available; that they should be usable for either one of the services. If, for instance, a ticket is purchased on a bus and the person wants to get back home and there is no bus service available, he should be able to use the train. If the services were properly coordinated that would be possible, but in discussing this matter with the Minister I was told that there was a difference in the fares and that the companies cannot agree about the apportionment which should be made. Surely there should be some-attempt to co-ordinate the services and provide reasonable facilities for the public.

The hon. Member for Hemsworth (Mr. G. Griffiths) has told us that there is no coordination between the different Departments of the Government. Obviously there is no co-ordination.
The hon. Member for Llanelly has called attention to something that is of vital importance to this country. There was a time when we were exporting to France 12,000,000 tons of coal a year; indeed, we have exported up to 79,000,000 tons of coal from this country. That has fallen tremendously and now there is an opportunity to recover a great deal of it. What is the Minister of Transport going to do? There is a desire to get an extra 30,000,000 tons of coal not only produced but exported from this country. In addition to that, we were told by the Secretary for Mines that the estimated saving as a result of domestic rationing would be 7,000,000 tons a year. That also may be desired for export, but if there is not the transport in order to deal with it, this coal cannot be exported. The export of coal is vital to the economy of the nation at the present time. I hope the Parliamentary Secretary will have something of a concrete character to say to us to-night on these problems. I should like him to be able to assure us, first, that in our Divisions the state of things, as described by my hon. Friend the Member for Stoke, in regard to the insufficiency of the transport facilities available to our people will be improved; and secondly, I want him to see that our railways are used to a much greater extent than they are now. The position is that you have the rolling stock and men necessary for maintaining a much higher level of service, but for some reason, which it is extremely difficult for me to understand, the service has been cut down until in some cases it has become almost useless to the people in the districts concerned. It is high time that the Ministry of Transport went into the matter very carefully and decided that there must be better facilities provided for our people.

8.32 p.m.

Lieut.-Commander Fletcher: I should like to ask the Parliamentary Secretary whether, as regards the transport of workers to and from their homes, his attention has been called to the question of the tram services in the East End of London at the present time. It happens that on several occasions recently I have


had to come up to London along the whole length of the Commercial Road, .at a time when the workers were returning to their homes in the evening. I was really distressed and horrified to see at tram stop after tram stop queues greater in length than the length of this Chamber, waiting to board trams to get home after their day's work. The queues were so long that I remarked to a companion who was with me that if those at the head of the Ministry of Information knew their business, instead of being more concerned in getting a job for a relative or a lady friend, they would have taken photographs of these queues and put them into the neutral Press as pictures of the rush of men, women, and children to join up for National Service.
I am sure that the Parliamentary Secretary, with his connection with the Ministry of Health, will be the first to recognise the misery, wretchedness and depression which these long waits to get on board a tram must cause to those who have just finished a long day's work. It is not only a question of depression and personal misery, but every doctor would tell a story of the effect upon health that is caused by long waits in the rain in such miserable weather as we have had during the past week or two. The thought at once occurred to me, Why are the tram services so inadequate? In the case of buses, it is a question of petrol, a matter into which I will not go to-night, as it has been dealt with fully by other hon. Members; but in my ignorance, I inquired whether the power stations are run upon fuel oil. I was told that they are run on coal, and in view of what has been said by my hon. Friends to-night on the question of coal and the possibility of improving production, I am completely at a loss to understand why a more adequate tram service cannot be provided in the East End of London for workers returning home at the end of their day's work. I should be very grateful if the Minister would give some indication that he has had that matter drawn to his attention and that he will go into the question, for I assure him I have not exaggerated in what I have said. The misery and wretchedness of these people really deserve some consideration.

8.35 p.m.

Sir Ernest Shepperson: I have listened with considerable sympathy to the

speeches that have been made, calling attention to the inconvenience suffered by workers, chiefly in industry, as a result of the deficiency of transport services. The industrial worker is not the only worker who requires the sympathy of this House. There are other classes concerned. There is, for instance, the Member of Parliament, who is suffering considerable inconveniences. I will refer to my own position. I live near the town of Huntingdon, the capital town of one of England's important counties. At the present time, I have only three trains during the day up to London and three trains out of London, and I want to assure the Parliamentary Secretary and the House that that deficiency in the train service causes me, a worker, a Member of the House, very considerable inconvenience.

8.36 p.m.

Mr. Bernays: I am very grateful to the hon. Member for Stoke (Mr. E. Smith) for raising this issue, because it gives me an opportunity to clear up one or two points, and to state what is the policy of the Ministry of Transport in regard to this very important question. The hon. Member's speech was mainly concerned with the provision of transport services, but there have been one or two other questions raised with which, for convenience, I will deal first. The question of the wagon shortage was raised by the hon. Member for Llanelly (Mr. J. Griffiths) and the hon. Member for Pontypool (Mr. Jenkins). I agree that there have been instances of a wagon shortage. My right hon. and gallant Friend is aware of the importance of the question. As the hon. Member for Llanelly knows, at the beginning of the war private wagons were pooled, and I assure him that that was no mere paper scheme. One of the difficulties at the present time is that wagons at their destination are not unloaded quickly enough; the collieries want them back and cannot get them. We are very anxious that in war time merchants should unload their wagons very much more speedily than in peace time, and my right hon. and gallant Friend has made a special appeal on this question to traders as a whole. Only last week, I had an opportunity of meeting the right hon. Member for Hillsborough (Mr. Alexander), representing the Co-operative Movement, and I was able to put before him the necessity for


unloading wagons as quickly as possible, and he was good enough to say, on behalf of the Co-operative Societies, that they would do all they could to speed up things.

Mr. Tinker: How is it possible to unload the wagons unless the commodity can be sold? The coal industry is not allowed to sell the full quota to people; they cannot unload the wagons because they are not allowed to sell the coal.

Mr. Bernays: The hon. Member will not expect me to answer for the Mines Department, but I think that, apart from that question, the coal merchants have been keeping wagons much too long.

Mr. G. Griffiths: Is it not a fact that all the wagons for collieries in Yorkshire have to go through Lancashire empty before they get to our county?

Mr. Bernays: I will not follow the hon. Member in that matter. What I was pointing out was that in order to meet the need for wagons, every wagon has to do more work now, and we are making a special appeal to traders to speed up the unloading of wagons. I would also say to hon. Members that if there is any special case of a colliery which is short of wagons we are always ready to take it up, and if the hon. Member will furnish me with particulars, I shall be glad to look into the matter.

Mr. J. Griffiths: I am glad that attention is being kept on the question of facilitating and expediting the clearance of wagons, but may I ask the Minister whether the Department is giving serious attention to the problem of the increased transport that will be necessary to meet the increased output?

Mr. Bernays: We are giving attention to that question. There are, however, difficulties. The normal replacement of worn-out wagons is 25,000 a year and it is also necessary to provide wagons for transport in France, so that there cannot be an immediate solution of the difficulty. We are relying at the moment upon traders to speed up the emptying of wagons.

Mr. G. Griffiths: But if the wagons are full now, is there not less shunting? Empty wagons have to be shunted about

a great deal, but it is not necessary to shunt the wagons if they are full, and, therefore, have not the wagons less work to do?

Mr. Bernays: No, because there is much more traffic on the railways now. There has been an enormous increase in the amount of traffic. I think I am right in saying that there has been an increase of 9,000,000 tons in traffic since the war, or 33⅓ per cent., and there is much more work for these wagons.

Mr. Jenkins: Before the hon. Member leaves the point about the new wagons, may I ask him whether any estimate has been made with regard to the number of wagons required and whether any steps are being taken to commence the additional production of wagons, because I happen to know some wagon works which are not working full time now.

Mr. Bernays: I have not heard myself of any instances of wagon works which are not working full time. The railway companies have this matter very closely under review, but they feel that if they could get existing wagons speedily released, it would, at any rate, relieve the position for the moment.
Before I turn to the main question which has been raised, I wish to say a word or two on the case mentioned by the hon. Member for East Hull (Mr. Muff). He complained that there was a firm which had not received a sufficient supplementary ration of petrol and he said that the Ministry of Mines had described the application as frivolous. I do not quite understand why the point was put to the Ministry of Mines in regard to the rationing of goods vehicles, but if the hon. Member will make his application to the Ministry of Transport in regard to this firm, I shall be glad to look into the case.

Mr. Muff: I should say that the application went to the Ministry of Transport in the first instance and they turned it down, and, of course, the Ministry of Mines is concerned with the question of petrol. But the hon. Gentleman's Department received the first application which was turned down because it was said to be out of all proportion.

Mr. Bernays: No doubt that is so, but the hon. Member will not expect me to deal with the case on its merits to-night. I would like to deal next with the question


raised by the hon. and gallant Member for Nuneaton (Lieut.-Commander Fletcher). I was very much concerned at the account which he gave of long queues of people waiting for trams in London. I have made some inquiries from my advisers and I am informed that, as far as the Ministry is aware, there has been no reduction in the number of trams but I will naturally take a note of what the hon. and gallant Member said and look into the question further.
I now come to the main question raised by the hon. Member for Burslem (Mr. MacLaren) in relation to the bus services in Stoke-on-Trent. I told the hon. Member in my answer that as a result of representations, the regional commissioner had re-examined the position and that the services would be improved on 3rd November. The hon. Member tells me he is informed that they are still unsatisfactory. I can only say to the hon. Member that if he will furnish me with any further facts they will be most carefully examined. I would point out that it is the peak period at which it is most important to maintain an adequate service and I am informed that in the case of Stoke-on-Trent the peak-hour services have not been reduced below the number in operation in normal times.
I know that the question of transport in Stoke-on-Trent is a rather thorny one and has had a long history. The hon. Member appeared to complain that in considering the proposed additional bus services, the Traffic Commissioners took into account the facilities afforded by railway transport and he appeared to think that they should not consider those facilities. I would remind him that they are required to do so by the Act which was passed when the Labour Government was in office and the right hon. Gentleman the Member for South Hackney (Mr. H. Morrison) was Minister of Transport. By the Traffic Act of 1930, the commissioners are required to have regard to the existence of alternative forms of transport, including rail transport.
But even apart from the necessity of petrol rationing it would, I fear, be virtually impossible to add to the buses now in operation at peak periods. This highly industrialised district has two intensive peak loads of traffic, one from 7.30 to 8 in the morning and the other from 5.30 to 6 in the evening. From

10 a.m. to 4 p.m., 70 per cent. of the Potteries Motor Traction Company's buses are idle in the garage, and to place more vehicles on the roads is not a question of cost but a question of labour. It would increase the difficulty of the already complex question of providing for "split shifts," and would make very difficult the operation of the guaranteed 48-hour week. Such reductions as have been made as a result of fuel rationing, relate to the operation of the bus services outside the peak periods. These amounted, in the first instance, to a reduction of approximately 25 per cent. of the normal services but as a result of representations, arrangements have been made, which came into operation last Wednesday, by which the aggregate services have been increased to anything from 82 per cent. to 85 per cent. of the pre-war mileage. I think the hon. Member will agree that in view of the necessities of the time that is not an unsatisfactory position. The hon. Member has very properly now raised the wider issue of the general supply of public transport in industrial areas. I do assure all the hon. Members who have raised this question to-night that my right hon. and gallant Friend is most anxious that there should be no avoidable curtailment of bus services in the peak hours. The hon. Member raised the question of the reduction of tram services. I am not aware of any such reduction, and I shall be very glad if, later on, he will furnish me with particulars.

Mr. J. Griffiths: Do I gather that the Ministry of Transport desire that during the peak hours there should be no reduction in public bus services—no reduction, that is, of the normal services before the war began?

Mr. Bernays: Yes; my right hon. and gallant Friend is most anxious that where the requirement is reasonable—of course, there may be places in which there has been some reduction in the population—

Mr. Jenkins: But may I point out the utter impossibility of that? In the garage that provides the buses in my own district about 40 per cent, of the employés have been dismissed, and it is utterly impossible to carry out that principle there. If the Ministry of Transport agree to it, steps ought to be taken to see that sufficient men are employed.

Mr. Bernays: I will certainly consider any individual case brought before me.

Mr. J. Griffiths: I can assure the hon. Gentleman that the bus services at the moment in the peak hour are not anything comparable to those at the same period before the war. I gather that the Minister is very desirous, so far as that is reasonable—by which, I take it, he means that where there has been a reduction of the population obviously there will be fewer buses—that the services should be kept at the same ratio as before, and he says that the procedure should be to bring cases to his attention. Does that mean that where there has been an increase of population he will take steps to see that bus services at these hours are kept up to the normal?

Mr. Jenkins: Will that principle apply also to railways, in the peak hour?

Mr. Bernays: I will keep to buses at the moment. If the hon. Member will furnish me with cases, I will, in consultation with my right hon. and gallant Friend, take up the question with the Regional Transport Commissioner. With regard to railways, if the hon. Member can furnish me with cases where he thinks the railway facilities are inadequate, I, in consultation with my right hon. and gallant Frend, will take up the question immediately. It is important on every ground, as I am sure we all agree, that workers in their journeys to and from their homes should be put to as little delay and inconvenience as possible. I want to emphasise, because I do not think it is fully appreciated, that it is always open to any operating company who consider a service to be inadequate to make repre-. sentations to the Regional Transport Commissioner, either for additional fuel or for a variation of the service, and it is always open—and it is frequently done—for any works to make representations. It is often done through the welfare superintendent to the Regional Transport Commissioner, and it is open to any member of the public too to make similar representations.
The hon. Member said that there has been a tendency to create monopolies for the railways, to insist that certain classes of goods should go by railway. The Regional Transport Commissioner, who, after all, is responsible for the saving of petrol, has to consider, when any claim

is made for a supplementary ration of petrol, whether those goods could go by railway, and if they could be conveniently taken by rail, it is his duty to say that they must go by rail. But I can assure the House that it is not because the Ministry of Transport has some bias in favour of the railways; it is merely a means of saving petrol. I think we must examine all these questions with the background of the urgent necessity for saving petrol. I am sure that every hon. Member realises the need for saving petrol, but I have heard outside of some road operators saying from time to time, "What is the necessity for the rationing of petrol?" I think that is most unreasonable, because there is the vastly increased consumption of petrol by the Air Force—you have only to consider the flights over Germany to realise that. Then there is the problem of fuelling the expanded mechanised Army; and the Navy in action requires, of course, far more motive power than the Navy in peace-time. We sometimes forget, too, that a greatly increased supply of petrol is now required by the Mercantile Marine, which, owing to the menace of the submarine, sometimes have to take circuitous routes in reaching their destinations. All this puts a heavy strain on storage and tanker capacity. In addition we must not lose sight of the fact that this petrol has to be paid for and that we are naturally faced with the necessity for purchasing the minimum necessary for the effective prosecution of the war. I am confident that, when these facts are fully known outside this House, and when they are fully appreciated, the country will realise that any inconvenience from which they are suffering—and which we are doing our best to minimise—is part of the price for victory, and they will not grudge paying it.

Mr. E. Smith: Do I understand the hon. Member to say that if anyone considers that the services are not being maintained at the period when men are going to and coming from work, the Minister is prepared to consider any reasonable request in order to maintain the maximum service possible?

Mr. Bernays: Certainly. I will, in consultation with my right hon. and gallant Friend, communicate immediately with the Regional Transport Commissioner and see what can be done. Our aim is to maintain the service. The hon. Member


raised two other questions. He raised the question of the provision of alternative fuel. The Secretary for Mines is making a statement on that subject to-morrow, and I know the hon. Member will not expect me to deal with it now. I would, however, just mention two Orders in this connection, which I think will be of interest, which have been issued by my right hon. and gallant Friend under the Emergency Powers Act. The first is the Public Service Vehicles (Drawing of Gas-Producer Trailers) Order, 1939, which enables public service vehicles to use trailers for the carrying of gas cylinders or producer plant for supplying gas to the engine. The second Order, the Motor Vehicles (Authorisation of Special Types) Order, 1939, authorises the use on roads of two vehicles owned by the London Passenger Transport Board fitted with gas-producer plant on an extension of the chassis frame which do not comply with the requirements as to overhang.
Lastly, the hon. Member raised the question of clearing houses. Clearing houses undoubtedly serve a useful purpose in the haulage industry, enabling small operators to obtain traffic and, in particular, to obtain return loads. The advantage of an arrangement of this kind has led to the setting up of privately-owned clearing houses dependent for their revenue on commission on the business which they put in the hands of hauliers. In any type of business the commission agent serves a useful purpose, but there are critics in this case who say that the commission is too high, and who criticise the way in which the business is conducted. My right hon. Friend fully recognises the need for the more economical use of transport in order to minimise the effects of petrol rationing, and this has partly been secured by the group system, that is, the organisation of vehicles into groups to secure the maximum use of the petrol available and the pooling of goods for carriage. My right hon. Friend has also called attention through the Ministry's regional organisation to the desirability of eliminating "light" running. This was discussed by a meeting of regional traffic commissioners in my Department this afternoon.
It has not been the policy of my right hon. Friend, however, to enter into the road transport industry; the object of the road transport organisation has been to

help the industry to help itself. I understand that efforts are being made by associations representative of the road transport industry to work out a satisfactory scheme of clearing-houses. The advantages to be derived from an extension of the clearing-house system are well understood by road hauliers, and my right hon. Friend is satisfied that he would not be justified himself in setting up official clearing-houses in competition with or in place of those clearing-houses already operating privately. I am very glad to have had the opportunity of making this statement. Petrol rationing is bound to create some hardship and inconvenience, but the regional transport commissioners are doing their best to discover where the shoe pinches, and where they find the shoe pinches they are already taking steps to bring relief.

Mr. Jenkins: Will the Minister say a word about the question I raised as to the interavailability of tickets? I understand that it is operative in some parts of the country, but not in all. Has he any point of view about that matter?

Mr. Bernays: The hon. Member will appreciate that this is not a question on which I could make a statement now, but I will carefully consider what he has said and will bring it to the attention of my right hon. Friend and see what can be done.

9.6 p.m.

Mr. A. Edwards: The Minister has made a point with regard to wagons and has said that he cannot get wagons on the road quickly enough and that that is causing difficulty to coal merchants. I would draw his attention to the fact that the railway companies are using a great many wagons to take bricks from the south of England, not far from London, to my constituency, and causing local brickworks to close down. The local brickworks are not very busy now, and this would be an opportunity for. the Minister to insist that when there is a greater demand for bricks again the railway companies will not be allowed to use their wagons to transport bricks from the south of England to the North-East Coast, where there are adequate facilities, particularly in my constituency, for making them? The Minister may say that they are not the type of wagons used for conveying coal, but in the last war all these wagons were used for that purpose.

9.7 p.m.

Mr. E. J. Williams: I received a complaint this morning from one of the district managers of Wagon Repairs Ltd., in South Wales that there was an enormous shortage of labour and that, unless something were done to release labour which has been called up from the works, an enormous number of wagons will be left stranded without the necessary repairs having been done to them. Application has been made for the release of certain persons. This occupation is not on the schedule of reserved occupations, but if something can be done by the Minister of Transport to see that an adequate supply of this skilled labour is kept in such works, it will be beneficial to the mining industry in particular, and to many other forms of transport.

NATIONAL HEALTH INSURANCE.

9.8 p.m.

Mr. Tomlinson: I wish to bring before the House the question of bankruptcy and the contributors' stamp payments under national health insurance. A week last Thursday I put a question to the Minister asking whether, in the case of an employer who had deducted from the wages of an employe the money necessary to meet the payments of the em-ploye under national health insurance, and who afterwards went bankrupt, his Department through the scheme, could make up the deficiency instead of debiting the individual concerned with arrears of payment under the Act. The Minister replied that this question had been before the Commissioners on many occasions since national health insurance was instituted, and every time it had been turned down because, he suggested, it might act as an incentive to an insured person not to see that his card was duly stamped at the proper time. The inference was that if it were known that in the case of a bankruptcy the deficiency of the individual whose card had not been stamped would be made good, it might lead to collusion between the employer who was going to become bankrupt and an employé. With a good deal of experience on the practical side of the matter, I cannot regard that as a reasonable argument. I realise that I shall be told that this is but a small problem, affecting only very few people,

but I suggest that an injustice is no less real because it affects only a few, and I am certain that when the House is aware of what happens in these cases it will call upon the Minister to remedy the grievance. Whether this injustice is remedied by the method I suggested or whether the Minister should examine each particular case as it comes before him and use his judgment is a matter for the Minister to decide.
In reply to the question I put in the House the Minister was good enough to send me a three- or four-page explanation of the attitude he had taken up. The first suggestion he made was that the Royal Commission in 1926 were unable to recommend the adoption of this proposal. They reported that they doubted whether the course suggested would be desirable, as it might encourage laxity in the payment of contributions at the proper time, and might prove embarrassing as a precedent if cited in support of a similar payment in cases not involving bankruptcy, for example, where an employer had disappeared. The Minister added that the Minority Report did not contain any expression of dissent from this conclusion. I am not surprised at that, because, as he has suggested, it is a small problem and the Commission were probably dealing with matters which they regarded as of greater importance. Why in the world an argument of that sort should have been used by the Commissioners I cannot understand. The situation could not arise where the employer had disappeared, because in that case his assets would remain and would be chargeable in respect of the stamps. A bankruptcy leads to injustice because, although the Ministry are preferential creditors, the Official Receiver does not get sufficient money to meet the full cost of the stamps.
The Minister, in his explanation to me, shows why, in my judgmenet, this change should take place. He says that so well does the system work at present that 99½ per cent. of the total amount due as contributions is regularly paid. That is a wonderful tribute to the insurance scheme, but it does not excuse the existence of this loophole under which injustice is done. Out of a total of something like £50,000,000 which is involved only £5,600 was claimed in bankruptcy proceedings during the last 12 months,


and the amount recovered by the Department was £3,250, leaving a deficiency of only £2,500. What does that mean? It means that that is the price of remedying this injustice; and seeing that the Central Fund is putting to reserve something in the neighbourhood of £1,000,000 a year, a sum of £2,500 ought not to stand between the Minister and the remedying of this injustice.
The Minister has suggested that there is some responsibility on the part of the employé to see that his card has been properly stamped. That proves that the Minister does not know the commercial practice in these matters. It is not the custom, in large undertakings, at any rate, for an individual's card to be available for him to examine it week by week. I am sure that nine-tenths of the employers whom I know would object very seriously if week by week any of their employés went to the office and asked to see whether their cards had been stamped. The cards are taken into the office and are not seen again by the employés until the end of the period for which they have to be stamped.
The case which led me to put down my question arose out of a bankruptcy in connection with a mill in the constituency of my hon. Friend the Member for Nelson and Colne (Mr. Silverman). There were in that mill 13 individuals whose cards had not been stamped, although the money had been deducted from their wages week by week, and as all the cases came within the one half-year there was 'no possibility of there having been carelessness on the part of those concerned. They were all following the routine adopted by every cotton employer and employé in Lancashire. In some instances the loss does not amount to much. If only two weeks have been worked by an individual and the value of one stamp is recovered the man is only one stamp in arrear, and as an individual is allowed two stamps in the year it may lead to no trouble if only one stamp is missing.
On the other hand, there may be a case where 25 stamps are missing and the cost of only 15 stamps can be recovered out of the proceeds of the bankruptcy. That will mean that the individual is 10 stamps in arrear. He then has either to make up those arrears or to suffer a reduction in the payments he receives for sickness benefit of double the amount per week of the value of the stamp. In such a case

it would mean an individual paying arrears of 16s. 8d., and there would be the unfairness that he was expected to pay his unemployment health insurance contribution no less than three times. His 10d. a week is deducted from his wages and put with the 10d. contributed by the employer to makes 1s. 8d. When the 1s. 8d. stamp has not been put on the card arrears have to be paid at the full amount. When the man is called upon to pay arrears he has to pay 10 sums of 1s. 8d. That means that, with the 10d. he has already paid, he is paying 10 half-crowns because his employer has turned out to be, in common parlance, a thief.
I do not want to pay a compliment to the Minister of Labour—I do not say that he is not deserving of it, but I do not want to hold his Department up as a paragon of virtue. In their administration, the Ministry of Labour are no doubt ahead of the Ministry of Health. I have had cases where bankruptcies had occurred and where the same argument was used, that at the end of the 12 months no stamps had been put on the cards. That meant that the men ought not to have been entitled to unemployment benefit because of the shortage of stamps. In three such cases the Minister of Labour has, to my knowledge and taking all the circumstances into consideration, decided, in the interests of the men, that the stamps ought to be credited to them, because they had paid for them, although their employers had failed to put the stamps upon the cards.
I suggest to the Minister of Health that even if he decides against doing away with the circular which provides for this kind of thing because it means getting a fresh lot printed, he should ask for sufficient power to remedy an injustice, even though he does not want to do it in the way I suggested in my question. When he places upon the individual concerned responsibility for seeing that the stamps are on their cards I suggest that what I put forward and he somewhat resented, namely, that the inspectors of his own Department are those who are responsible, is, in law, the actual position. The only person who can summon employers for the recovery of the stamps is the Minister. They have sinned against his administration of the law and he can and sometimes does take them into court for refusing to


do it. The inspector is the only individual outside the employe who is able to call upon the employer and ask whether the cards have been stamped. It is on him that the responsibility rests for seeing that those orders have been carried out.
The Minister can remedy this in the manner that has been suggested previously, even though the Royal Commission turned it down. The Royal Commission, which sat in 1924, could not know as much about this question as the Minister of Health knows in 1939, because since then there has been 15 years' experience. If, during the last week, only £2,500 arrears was claimed, that is all the more reason why the right hon. Gentleman should remedy the matter to-night. The circular to which I referred, which the Minister sends out, is in this instance as follows:
Madam, I have to inform you that health and pensions insurance contributions to the value of 1s. 2d. in respect of the period…have now been recovered out of the estate in bankruptcy of your late employer, Mr. H. Chadwick. No further assets are available for the repayment of arrears of contributions and no further action can be taken in the matter by this Department. The contributions are being advised to your Approved Society, in order that they may be credited to you.
What follows after that is that the individual receives notice, in spite of the fact that he has been working and has imagined that he was paid up, that there were so many stamps in arrear. Any failure to pay the penalty means being subject to the disability which applies to an individual who has not contributed at all. It is a great injustice, and greater because of the few people whom it occasionally affects.

9.25 p.m.

Mr. Silverman: I should like to support the plea which my hon. Friend the Member for Farnworth (Mr. Tomlinson) makes, especially since, I think, the great majority of the cases during the past year in this unfortunate situation have arisen in my own constituency. I do not think it necessary to add a word to the extremely lucid picture which my hon. Friend has given of the manifest and obvious injustices of a situation in which an employé in a hard-hit and poorly paid industry may be called upon to pay his contributions three times over before becoming entitled to benefit from them.
I would refer to the suggestion which, I understand, the Minister has made as to the reasons why he could not come to the assistance of the people in the handful of cases which have been so unfairly treated. I understand the principal reason is that it might make an employé laxer than he ought to be in seeing that the money he pays is properly applied. As I understand the scheme, it was precisely because the Ministry of Labour realised how difficult it was for the employé to do that, that the onus was placed upon the employer to see that the stamps were affixed. The employer is in control of the money and of the cards. He is always there and his books can be inspected, whereas the employé is not in so advantageous a position for seeing that the stamp is affixed or being able to supervise in order to see that it is affixed. It is said to be the duty of the individual employé to go week by week to the office and say: "Please can I see my card? I know that I have paid my money. I do not believe that you have put the stamps on the card unless I see them." How can an employé be expected to do that?
I would relate an experience which I had in Liverpool this month. This instance does not concern so much national health insurance contributions as unemployment, but the principle is the same. A man was employed in a big building concern in Liverpool. He was engaged upon building air-raid shelters. The firm had not a regular office on the site where the work was being done, so the man gave his cards to the foreman, who put them in his pocket, intending, when a reasonable opportunity occurred, to hand them into the office in the proper way. At the end of 10 weeks, the employers had no further use for the man's services and then, for the first time, he was told that his cards were lost. They paid him his week's wages and gave him his 10 weeks' stamps to put in his waistcoat pocket. That was entirely improper, but when I called attention to it I was told: "Mr. Silverman, you must remember that this is a very good firm of standing, which does not do improper things. We recognise that this was not quite right but, unfortunately, the circumstances were exceptional and difficult, and we do not think we ought to take any action about it." The man was provided with a temporary card so that he


could put his stamps upon it. I am not making any criticism about that.
The reason I cited that instance was to illustrate my point of how difficult it is for the employé to keep check of a situation of that kind. But it does not quite stop there. I was glad that my hon. Friend mentioned the question of the inspectors of the right hon. Gentleman's Department. I did not know that this question would be raised this evening; I do not complain of that, but it is a fact that I did not know, and had I known I might have had with me certain notes, papers and reports which I have in my possession. Therefore, I cannot cite an authority for what I am saying, but I believe it to be true that in the particular case which my hon. Friend had in mind there was a period before the bankruptcy occurred in which it was obvious to everybody and it was known to the inspector that the firm was in a financially weak position. Of course, when people go bankrupt they do not do so suddenly; it is the end of a long struggle and there are periods before the bankruptcy occurs when the financial position is weak.
Not only did that man's inspector know of that, but he himself knew that the stamps were substantially in arrear, although the employés had paid their money, and when he was pressed to take some action about it he said, "Well, of course, under the rules and according to the system to control which I am appointed an inspector, that is what I ought to do. I ought to take this man into the police court here and now and charge him with the offences which he has committed under the Act, but if I do that I will merely push this man over the verge of bankruptcy and all these workpeople will lose their livelihood. Do you want me to do that?" Does the right hon. Gentleman see the importance of that factor, especially its bearing upon his argument about the duty of the employé? The employé is in a cleft stick when he knows that the stamps have not been paid, if he is a worker in an industry which is as hard hit as this industry has been for many years. If he goes to his employer and says, "Make up my stamps completely and make them up now," and the employer replies, "If you force me to do that you will drive me out of business," and when the right hon. Gentleman's inspector takes exactly the same

line and refuses to exercise the power that he has because if he does exercise it the employer may be driven into bankruptcy and the man's employment may be lost, the right hon. Gentleman is really not entitled to argue that there is some obligation on the employé to do what his own inspector for that good, bad or indifferent reason expressly refuses to do.
Although the matter is one of the very greatest importance to the individual workpeople concerned, from the right hon. Gentleman's point of view it is a very small matter indeed. I agree with my hon. Friend that if you have 99½ per cent. right, the fact that it is only ½per cent. that is wrong increases and does not diminish the injustice to those who are left out of the scheme in this way. It makes it worse and not better to say, "Oh, well, it is only a few of them." I would say to the right hon. Gentleman that when, from his point of view, the matter is in so small a compass and when the figures are such that they would hardly be noticed at all in his annual balance sheet, he really might make an effort to see whether within the powers that he now has, this trifling sum might not be paid in order to ensure that those workpeople who have paid what they were required to pay under the law get what they have been paying for. I suggest that he has the power now. I think he will agree that he would be acting quite within the powers vested in him if before transferring any surplus at the end of the year—whatever it is that goes into the reserve funds—he were to say, "There is an odd couple of thousand pounds, and I am entitled to use that money to remedy this lack of accommodation in the working of the scheme, this gap which produces an injustice." Perhaps he might use these powers, and see that this very great injustice to a small number of decent and hard-working people is now removed.

9.36 p.m.

The Minister of Health (Mr. Elliot): I am indebted to the hon. Member for Farnworth (Mr. Tomlinson) for giving me notice that he intended to raise this matter this evening; and I am indebted to him also for having read to the House the letter which I sent him in order to set out as far as possible the arguments on the matter, so that we might be at one on the exact points of difference. I must admit that he put the points in a


lucid, and indeed a convincing, manner. I do not quite agree with him, however, when he says that perhaps the Royal Commission did not go into the matter, because it was so small a matter. After all, that is what Royal Commissions are for. This Royal Commission went into the matter, and reported adversely on the contention which the hon. Member brings forward. It was a Commission which had far greater knowledge than any that I can pretend to of the circumstances of the case. Nor was it a new problem on which we have had a great deal more experience since then; because the matter has been, as the hon. Member knows, under consideration off and on since 1912. In 1924 there was considerable experience—

Mr. Tomlinson: Would the Minister not agree that they considered only one of the alternatives to which I have referred and not the other.

Mr. Elliot: That is so. I am going to comment on that in a moment. The hon. Member for Farnworth suggested that there was a way of individual discretion on the part of the Minister, somewhat similar to the discretion exercsed by the Minister of Labour. A bouquet was thrown to the Minister of Labour, which I shall certainly convey to him, these things being all too rare—and perhaps I should regard it for that reason as being all the more a triumph for the Minister of Labour. But the circumstances are not exactly the same. There are central funds at the disposal of the Minister of Labour which are much greater than those at the disposal of the Minister of Health, and his power of regulation is more comprehensive than mine. In fact, it is possible that such a step might require legislation before it is decided upon. I did not raise thas aspect of the matter, because it cannot be discussed by us here to-night on the Adjournment.
As the hon. Member for Nelson and Colne (Mr. Silverman) developed his argument, I began to think that perhaps there was more to be said for the view of the Royal Commission than I had grasped at first. The argument that he advanced, to the effect that an inspector or contributor might hesitate before asking for stamps to be placed on a card because it might push some struggling firm over the

frontier into bankruptcy, was a dangerous argument, which might lead to those methods of collusion to which I referred.

Mr. Silverman: My information is just precisely that which occurred in the particular case to which my hon. Friend referred so that the Ministry was in that sense a party to the position which now exists.

Mr. Elliot: What the hon. Gentleman did rule out was that in certain cases the employé might hesitate before pressing that the law should be put into operation for fear that it would in fact cause the firm to pass from solvency to bankruptcy, which is the collusion to which I referred when writing to the hon. Member. I think the case is perfectly clear.

Mr. Silverman: I am suggesting in this particular case, that if there was coercion of that kind, it was coercion to which his inspector was a party.

Mr. Elliot: The fact that two people might be a party to collusion does not make it half as bad, but twice as bad. The danger of collusion is clearly one which could not entirely be ruled out on evidence submitted by the hon. Gentleman the Member for Nelson and Colne himself. I have no desire to stand on technicalities here. There is a case such as that which the hon. Member for Farnworth has brought up, and which, in reply to a question in the House, I indicated I would keep closely in mind, and undertook in my letter to him to review the matter, and I am reviewing the matter now. It is true that the sum is not in itself a large one, and if the matter can be solved without causing an injustice greater than that which we seek to avoid, I shall be very glad to have this injustice removed, for many of us feel that injustice arises when a person who has, in good faith, paid for benefits finds himself deprived of those benefits through no fault of his own. It arises not only in cases of National Health Insurance benefit, but in other benefits paid for in the same way, and it would be impossible to examine one of these benefits entirely separate from the others. I do not myself intend to ride off on the fact that it was recommended against by the Royal Commission a long time ago, or on the ground that it might possibly require legislation. If it were found impossible to deal with it


by regulation, I should not hesitate to inquire of those who are expert in such matters with the object of attempting to frame some non-controversial and short Measure which would put this matter right.
I have not yet completed my examination of the matter. It will be conducted in a most sympathetic spirit to see whether this can possibly be remedied. If I arrive at the conclusion that it can be remedied, I shall have no hesitation in coming forward either with a regulation, or, if necessary, a request, to the House that it should endow me with powers to deal with the matter and see whether we cannot remove a difficulty, which, though small in itself, might cause a great many hardships to a certain number of persons.

Question, "That this House do now adjourn," put, and negatived.

WATER SUPPLY BILL.

Order for Third Reading read.

Motion made, and Question, "That the Bill be now read the Third time," put, and negatived.

CONSCRIPTION OF WEALTH (PREPARATORY PROVISIONS) BILL.

Order read for resuming Adjourned Debate, on Question [10th October],"That the Bill be now read a Second time."

Question again proposed.

9.46 p.m.

Mr. Boothby: I do not think we ought to allow this Bill to pass without some observations. We have already debated this afternoon the whole question of loans and the finance policy of the Government, and here we are at nearly ten minutes to ten asked to debate a Bill of a most drastic character, which I do not think the House in its present state—I refer merely to the numbers present—should pass without some form of discussion. In the present phase of the war such a Bill goes very much beyond what hon.

Members even on the Labour benches would consider it right to justify. The first phase of any war is bound to be extremely deflationary in character. By that I mean that large numbers of business men all over the country are put to great expense and have to make drastic adjustments to meet an entirely new situation that has been created. Many workers in all industries and trades are thrown out of employment because for the time being those particular trades and industries are reduced to a condition where they practically cease to function, and a comparatively lengthy period of transition is required before the full productive capacity and energy of the country is once again brought into place.
I think my hon. Friend the Member for East Wolverhampton (Mr. Mander) has failed to realise these extremely important facts. There is a great deal of unemployment at the present time. I think the condition of industry in the country to-day affords grounds for very grave anxiety, and that a period of at least six months should be allowed to elapse before any drastic measures are introduced of this particular kind to deal with a situation which I believe my hon. Friend would be the first to admit does not at present exist. He is himself engaged in industry. He knows that many industries which have no connection with actual war production are finding the greatest difficulty at the moment. He knows the savage taxes that have already been introduced by the Chancellor of the Exchequer. I do not in principle disagree with the ultimative objectives of this Bill, but I do say that this is not the right moment to introduce legislation of this character. I have fortified myself in these arguments by the speech which I have already made to-day, that at this particular juncture—

Notice taken that40 Members were not present; House counted; and40 Members not being present—

The House was adjourned at Six Minutes before Ten of the Clock till To-morrow.